Telemarketing Sales Rule, 26760-26786 [2024-07180]

Download as PDF 26760 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations Strategic Infrastructure, Washington, DC 20546. Nanette Smith, Team Lead, NASA Directives and Regulations. [FR Doc. 2024–07421 Filed 4–15–24; 8:45 am] BILLING CODE 7510–13–P FEDERAL TRADE COMMISSION 16 CFR Part 310 I. Background RIN 3084–AB19 Congress enacted the Telemarketing and Consumer Fraud and Abuse Prevention Act (‘‘Telemarketing Act’’ or ‘‘Act’’) in 1994 to curb abusive telemarketing practices and provide key anti-fraud and privacy protections to consumers.2 The Act directed the Commission to adopt a rule prohibiting deceptive or abusive telemarketing practices.3 The Act also directed the Commission to include, among other provisions, disclosure requirements and to consider recordkeeping requirements in its rulemaking.4 Pursuant to the Act, the Commission promulgated the TSR on August 23, 1995.5 The Rule prohibits deceptive or abusive telemarketing practices, such as misrepresenting several categories of material information or making false or misleading statements to induce a person to pay for a good or service.6 The Rule also requires sellers and telemarketers to make specific disclosures and keep certain records of their telemarketing activities.7 The Commission determined that recordkeeping requirements were necessary to ‘‘ascertain whether sellers and telemarketers are complying with the [. . .TSR], identify persons who are involved in any challenged practices, and [ ] identify customers who may have been injured.’’ 8 Since 1995, the Commission has amended the Rule on four occasions: (1) in 2003 to create the National Do Not Call (‘‘DNC’’) Registry and extend the Rule to telemarketing calls soliciting charitable contributions (‘‘charity Telemarketing Sales Rule Federal Trade Commission. Final rule. AGENCY: ACTION: The Federal Trade Commission (‘‘FTC’’ or ‘‘Commission’’) adopts amendments to the Telemarketing Sales Rule (‘‘TSR’’) that, among other things, require telemarketers and sellers to maintain additional records of their telemarketing transactions, prohibit material misrepresentations and false or misleading statements in business to business (‘‘B2B’’) telemarketing calls, and add a new definition for the term ‘‘previous donor.’’ These amendments are necessary to address technological advances and to continue protecting consumers, including small businesses, from deceptive or abusive telemarketing practices. DATES: The amendments are effective May 16, 2024. However, compliance with 16 CFR 310.5(a)(2) is not required until October 15, 2024. The incorporation by reference of certain material listed in the rule is approved by the Director of the Federal Register as of May 16, 2024. ADDRESSES: Relevant portions of the record of this proceeding, including this document, are available at https:// www.ftc.gov. SUMMARY: FOR FURTHER INFORMATION CONTACT: khammond on DSKJM1Z7X2PROD with RULES Rulemaking (‘‘2022 NPRM’’).1 After careful review and consideration of the entire record on the issues presented in this rulemaking proceeding, including 26 public comments submitted by a variety of interested parties, the Commission has decided to adopt, with several modifications, the proposed amendments to the TSR intended to curb deceptive or abusive practices in telemarketing and improve the effectiveness of the TSR. Patricia Hsue, (202) 326–3132, phsue@ ftc.gov, or Benjamin R. Davidson, (202) 326–3055, bdavidson@ftc.gov, Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Mail Stop CC–6316, Washington, DC 20580. SUPPLEMENTARY INFORMATION: This document states the basis and purpose for the Commission’s decision to adopt amendments to the TSR that were proposed and published for public comment in the Federal Register on June 3, 2022 in a Notice of Proposed VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 1 Notice of Proposed Rulemaking (‘‘2022 NPRM’’), 87 FR 33677 (June 3, 2022). 2 Public Law 103–297, 108 Stat. 1545 (1997) (codified as amended at 15 U.S.C. 6101 through 6108). 3 15 U.S.C. 6102(a)(1). 4 15 U.S.C. 6102(a)(3). 5 See Statement of Basis and Purpose and Final Rule (‘‘Original TSR’’), 60 FR 43842 (Aug. 23, 1995). 6 See, e.g., 16 CFR 310.3(a); see also Original TSR, 60 FR at 43848–51. 7 See, e.g., 16 CFR 310.3(a)(1), 310.5; see also Original TSR, 60 FR at 43846–48, 43851, 43857. 8 Original TSR, 60 FR at 43857. PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 calls’’); 9 (2) in 2008 to prohibit prerecorded messages (‘‘robocalls’’) in sales calls and charity calls; 10 (3) in 2010 to ban the telemarketing of debt relief services requiring an advance fee; 11 and (4) in 2015 to bar the use in telemarketing of certain payment mechanisms widely used in fraudulent transactions.12 Despite making significant amendments to the Rule, the Commission has not updated the recordkeeping provisions since the Rule’s inception in 1995.13 Evolutions in technology and the marketplace have made it more difficult for regulators to enforce the TSR, particularly provisions relating to the DNC Registry.14 As a result, the Commission solicited comment during its regulatory review process on whether it should update the recordkeeping provisions, and subsequently proposed amending them in the 2022 NPRM.15 The 2022 NPRM also proposed applying the TSR’s prohibitions on deceptive telemarketing to B2B calls.16 The original TSR generally excluded 9 See Statement of Basis and Purpose and Final Amended Rule (‘‘2003 TSR Amendments’’), 68 FR 4580 (Jan. 29, 2003) (adding Do Not Call Registry, charitable solicitations, and other provisions). The Telemarketing Act was amended in 2001 to extend its coverage to telemarketing calls seeking charitable contributions. See Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (‘‘USA PATRIOT Act’’), Public Law 107–56, 115 Stat. 272 (Oct. 26, 2001) (adding charitable contribution to the definition of telemarketing and amending the Act to require certain disclosures in calls seeking charitable contributions). 10 See Statement of Basis and Purpose and Final Rule Amendments (‘‘2008 TSR Amendments’’), 73 FR 51164 (Aug. 29, 2008) (addressing the use of robocalls). 11 See Statement of Basis and Purpose and Final Rule Amendments (‘‘2010 TSR Amendments’’), 75 FR 48458 (Aug. 10, 2010) (adding debt relief provisions including a prohibition on misrepresenting material aspects of debt relief services in Section 310.3(a)(2)(x)). The Commission subsequently published technical corrections to Section 310.4 of the TSR. 76 FR 58716 (Sept. 22, 2011). 12 See Statement of Basis and Purpose and Final Rule Amendments (‘‘2015 TSR Amendments’’), 80 FR 77520 (Dec. 14, 2015) (prohibiting the use of remotely created checks and payment orders, cashto-cash money transfers, and cash reload mechanisms). 13 When the Commission decided in 2003 and 2010 to make substantive amendments to the TSR, it declined to modify the Rule’s recordkeeping provisions. See 2003 TSR Amendments, 68 FR at 4645, 4653–54 (declining to implement any of the suggested recordkeeping revisions that were raised in the public comments); 2010 TSR Amendments, 75 FR at 48502. 14 2022 NPRM, 87 FR at 33679–81. 15 The Commission issued the 2022 NPRM after it had embarked on a regulatory review of the TSR in 2014. In that review, it sought feedback on a number of issues, including the existing recordkeeping requirements. See 2014 TSR Rule Review, 79 FR 46732, 46735 (Aug. 11, 2014). 16 2022 NPRM, 87 FR at 33682–83. E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations B2B calls, except those selling office and cleaning supplies, because in the Commission’s experience at the time, those calls were ‘‘by far the most significant business-to-business problem area.’’ 17 In 2003, the Commission considered extending the TSR’s protections to B2B calls selling internet or web services, but decided against doing so for fear of chilling technological innovation.18 It did, however, note it would ‘‘continue to monitor closely’’ B2B telemarketing practices in this area and ‘‘may revisit the issue in subsequent Rule Reviews should circumstances warrant.’’ 19 Since then, the Commission has continued to see small businesses harmed by deceptive B2B telemarketing, and the 2022 NPRM proposed extending Section 310.3(a)(2)’s prohibition on misrepresentations 20 and Section 310.3(a)(4)’s prohibition on false or misleading statements 21 to B2B calls.22 Finally, the 2022 NPRM proposed adding a definition for ‘‘previous donor.’’ In 2008 the Commission amended the TSR to prohibit robocalls, but allowed charity robocalls if the recipient is a ‘‘member of, or previous donor to, a non-profit charitable organization on whose behalf the call is made.’’ 23 The Commission intended this narrow exemption to apply only to consumers who had previously donated to the soliciting organization,24 but the Commission did not define ‘‘previous donor.’’ 25 The new definition will 17 Original TSR, 60 FR at 43867, 43861. TSR Amendments, 68 FR at 4663; 2022 NPRM, 87 FR at 33682–83. 19 2003 TSR Amendments, 68 FR at 4663; 2022 NPRM, 87 FR at 33682–83. 20 Section 310.3(a)(2) prohibits, among other things, misrepresenting: the total cost to purchase a good or service, material restrictions on the use of the good or service, material aspects of the central characteristics of the good or service, material aspects of the seller’s refund policy, the seller’s affiliation with or endorsement by any person or government agency, or material aspects of a negative option feature or debt relief service. See 16 CFR 310.3(a)(2)(i)–(x). 21 Section 310.3(a)(4) prohibits making false or misleading statements to induce any person to pay for goods or services or induce a charitable contribution. See 16 CFR 310.3(a)(4). 22 2022 NPRM, 87 FR at 33682–83. When the Commission issued the 2022 NPRM, it also issued an Advance Notice of Proposed Rulemaking (‘‘2022 ANPR’’) in which it sought public comment on whether to extend all of the TSR’s protections to B2B calls. 2022 ANPR, 87 FR 33662 (June 3, 2022). The Commission addresses the public comments submitted in response to the 2022 ANPR in a Notice of Proposed Rulemaking that the Commission is issuing simultaneously with this Final Rule. 23 See 2008 TSR Amendments, 73 FR at 51185. To qualify for this narrow exemption, sellers and telemarketers must also comply with the provisions of Section 310.4(b)(1)(v)(B). 24 Id. 25 Pursuant to the USA PATRIOT Act, the Commission amended the TSR in 2003 to extend its khammond on DSKJM1Z7X2PROD with RULES 18 2003 VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 clarify that telemarketers are prohibited from making charity robocalls unless the call recipient donated to the soliciting non-profit charitable organization (‘‘charity’’) within the last two years.26 II. Overview of the Proposed Amendments to the TSR A. Recordkeeping The TSR’s recordkeeping provisions, which have remained unchanged since the Rule was promulgated in 1995, generally require telemarketers and sellers to keep for a 24-month period records of: (1) any substantially different advertisement, including telemarketing scripts; (2) lists of prize recipients, customers, and telemarketing employees directly involved in sales or solicitations; and (3) all verifiable authorizations or records of express informed consent or express agreement.27 They may keep the records in any form and in the same manner and format as they would keep such records in the ordinary course of business, and they may allocate responsibilities of complying with the Rule’s recordkeeping requirements between the seller and telemarketer.28 The telemarketing landscape has changed drastically since 1995. Technological advancements have made it easier and cheaper for unscrupulous telemarketers to engage in illegal telemarketing, resulting in a greater proliferation of unwanted calls.29 Bad coverage to charity calls. 2003 TSR Amendments, 68 FR at 4582. As part of that amendment, the Commission defined ‘‘donor’’ as ‘‘any person solicited to make a charitable contribution.’’ Id. at 4590. 26 2022 NPRM, 87 FR at 33679. 27 16 CFR 310.5(a). 28 16 CFR 310.5(b) & (c). 29 See, e.g., Prepared Statement of the Federal Trade Commission Before the United States Senate Committee on Commerce, Science and Transportation: Abusive Robocalls and How We Can Stop Them (Apr. 18, 2018), available at https:// www.ftc.gov/system/files/documents/public_ statements/1366628/p034412_commission_ testimony_re_abusive_robocalls_senate_ 04182018.pdf (last visited Dec. 11, 2023); see also Prepared Statement of the Federal Trade Commission: Oversight of the Federal Trade Commission Before the United States Senate Committee on Commerce, Science, and Transportation (Aug. 5, 2020), available at https:// www.ftc.gov/system/files/documents/public_ statements/1578963/p180101testimonyftcover sight20200805.pdf (last visited Dec. 21, 2023). From 2019 to 2023, the Commission received on average nearly 4 million Do Not Call complaints per year, and the DNC Registry currently has over 249 million active telephone numbers. FTC, Do Not Call Data Book 2023 (‘‘2023 DNC Databook’’), at 6 (Nov. 2023), available at https://www.ftc.gov/system/files/ ftc_gov/pdf/Do-Not-Call-Data-Book-2023.pdf (last visited Dec. 11, 2023). By comparison, within one year of its launch, the DNC Registry had over 62 million active telephone numbers registered, and the Commission received over 500,000 Do Not Call PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 26761 actors hide their identities by using technology to ‘‘spoof’’ or fake a calling number, making it more difficult for the Commission to identify the responsible parties or obtain records of their illegal telemarketing activities.30 Technology also allows these bad actors to operate from anywhere in the world, posing additional challenges to the Commission’s law enforcement efforts.31 The primary hurdles in enforcing the TSR in the current telemarketing landscape are in: (1) identifying the telemarketer and seller responsible for the telemarketing campaign; (2) obtaining call detail records; and (3) linking the content of the telemarketing calls with the call detail records to determine which TSR provisions might apply to the telemarketing activity. As explained in more detail in the 2022 NPRM, to identify the responsible parties and obtain evidence of their telemarketing activities, the Commission often must issue civil investigative demands to multiple voice service providers to trace a call from the consumer to the telemarketer’s voice provider.32 In some instances, by the time the Commission has identified the relevant voice provider, the voice provider may not have retained records of the telemarketing calls such as the date, time, call duration, and disposition of each call, or the phone number(s) that placed and received each call (i.e. ‘‘call detail records’’).33 As a result, the call detail records either no longer exist or are not available for law complaints. See Annual Report to Congress for FY 2003 and 2004 Pursuant to the Do Not Call Implementation Act on Implementation of the National Do Not Call Registry, at 3 (Sept. 2005), available at https://www.ftc.gov/sites/default/files/ documents/reports/national-do-not-call-registryannual-report-congress-fy-2003-and-fy-2004pursuant-do-not-call/051004dncfy0304.pdf (last visited Dec. 11, 2023); National Do Not Call Registry Data Book for Fiscal Year 2009, at 4 (Nov. 2009), available at https://www.ftc.gov/sites/default/files/ documents/reports_annual/fiscal-year-2009/ 091208dncadatabook.pdf (last visited Dec. 11, 2023). Conversely, technological advancements have also reduced the burden and costs of recordkeeping. 2022 NPRM, 87 FR at 33685 n.95 and 33690–91. 30 See supra note 29. On June 25, 2019, the FTC announced ‘‘Operation Call it Quits,’’ which included 94 actions against illegal robocallers, many of which used spoofing technology. See Press Release, FTC, Law Enforcement Partners Announce New Crackdown on Illegal Robocalls (June 25, 2019), available at https://www.ftc.gov/newsevents/press-releases/2019/06/ftc-law-enforcementpartners-announce-new-crackdown-illegal (last visited Dec. 11, 2023). 31 See supra note 29. 32 2022 NPRM, 87 FR at 33680–81. 33 Id. at 33680. In other instances, voice providers assert it is cost prohibitive to retrieve because they only maintain records in an easily retrievable format for several months before archiving them in the ordinary course of business. E:\FR\FM\16APR1.SGM 16APR1 26762 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations enforcement purposes, and the Commission cannot identify the bad actor responsible for the spoofed or otherwise illegal calls.34 Call detail records are also necessary to ascertain compliance with certain provisions of the TSR such as the DNC Registry.35 And as detailed in the 2022 NPRM, even when the Commission and other law enforcers are successful in obtaining call detail records, the records alone do not contain sufficient information about the content of the calls for regulators to determine whether the telemarketer or seller has violated the TSR.36 The proposed amendments to the recordkeeping requirements addressed the challenges identified above. They included new recordkeeping requirements of telemarketing activity that telemarketers or sellers are in the best position to provide.37 Specifically, the proposed amendments required the retention of the following new categories of information: (1) a copy of each unique prerecorded message, including each call a telemarketer makes using soundboard technology; 38 (2) call detail records of telemarketing campaigns; 39 (3) records sufficient to show a seller has an established business relationship (‘‘EBR’’) with a consumer; 40 (4) records sufficient to 34 Id. 35 Id. 36 Id. at 33681. at 33680–82. khammond on DSKJM1Z7X2PROD with RULES 37 Id. 38 Soundboard technology is technology that allows a live agent to communicate with a call recipient by playing recorded audio snippets instead of using his or her own live voice. See FTC Staff Opinion Letter on Soundboard Technology, at 1 (Nov. 10, 2016), available at https://www.ftc.gov/ system/files/documents/advisory_opinions/letterlois-greisman-associate-director-division-marketingpractices-michael-bills/161110staffopsound boarding.pdf (last visited Dec. 11, 2023). 39 The proposed amendments stated the call detail records include for each call a telemarketer places or receives, the calling number; called number; time, date, and duration of the call; and the disposition of the call, such as whether the call was answered, dropped, transferred, or connected. If the call was transferred, the record should also include the phone number or IP address that the call was transferred to as well as the company name, if the call was transferred to a company different from the seller or telemarketer that placed the call. 2022 NPRM, 87 FR at 33684. 40 For each consumer with whom a seller asserts it has an established business relationship, the proposed amendments stated a seller must keep a record of the name and last known phone number of that consumer, the date the consumer submitted an inquiry or application regarding that seller’s goods or services, and the goods or services inquired about. A seller may also show it has an established business relationship with a consumer if that consumer purchased, rented, or leased the seller’s goods or services or had a financial transaction with the seller during the 18 months before the date of the telemarketing call. Another proposed amendment modifies the existing recordkeeping provisions to state that records of VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 show a consumer is a previous donor to a particular charity; 41 (5) records of the service providers that a telemarketer uses to deliver outbound calls; 42 (6) records of a seller or charitable organization’s entity-specific do-not-call registries; 43 and (7) records of the Commission’s DNC Registry that were used to ensure compliance with this Rule.44 The proposed amendments also required the retention of other new records that help identify the nature and purpose of each call including: (1) the identity of the telemarketer who placed or received each call; (2) the seller or charitable organization for which the telemarketing call is placed or received; (3) the good, service, or charitable purpose that is the subject of the call; (4) whether the call is to a consumer or business, utilizes robocalls, or is an outbound call; and (5) the telemarketing script(s) and the robocall recording (if applicable) that was used in the call.45 The proposed amendments also required the retention of records regarding the caller ID transmitted if the call was an outbound call, including the existing customers should also include the date of the financial transaction to establish EBR under these circumstances. Id. at 33685. 41 If a telemarketer intends to assert that a consumer is a previous donor to a particular charity, the Commission proposed that for each such consumer the telemarketer must keep a record of that consumer’s name and last known phone number, and the last date that consumer donated to the particular charity. The proposed amendments also included a new definition of ‘‘previous donor.’’ Id. at 33685. 42 The proposed amendments stated that service providers include, but are not limited to, voice providers, autodialers, sub-contracting telemarketers, or soundboard technology platforms. The Commission did not intend for this provision to include every voice provider involved in delivering the outbound call and limited this provision to the service providers with which the seller or telemarketer has a business relationship. For each such entity, the seller or telemarketer must keep records of any applicable contracts, the date the contract was signed, and the time period the contract is in effect. The proposed amendments also stated that the records should be retained for five years after the contract expires or five years from the date the telemarketing activity covered by the contract ceases, whichever is shorter. Id. at 33685– 86. 43 For the entity-specific do-not-call registry, the Commission proposed requiring telemarketers and sellers to retain records of: (1) the consumer’s name, (2) the phone number(s) associated with the DNC request, (3) the seller or charitable organization from which the consumer does not wish to receive calls, (4) the telemarketer that made the call; (5) the date the DNC request was made; and (6) the good or service being offered for sale or the charitable purpose for which contributions are being solicited. Id. at 33686. 44 The Commission proposed requiring telemarketers or sellers to keep records of every version of the FTC’s DNC Registry the telemarketer or seller downloaded to ensure compliance with the TSR. Id. at 33686. 45 Id. at 33684. PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 name and phone number that was transmitted, and records of the telemarketer’s authorization to use the phone number and name that was transmitted.46 The proposed amendments also modified or clarified existing recordkeeping requirements to delineate more clearly the information telemarketers or sellers must keep to comply with those provisions, and specified what information is required to assert an exemption or affirmative defense to the TSR.47 Specifically, the proposed amendments modified the recordkeeping provisions to require retention of a customer or prize recipient’s last known telephone number and last known physical or email address, and the date a customer bought a good or service.48 It modified the time period to keep records from two years to five years from the date the record is made, except for advertising materials under Section 310.5(a)(1) and service contracts under Section 310.5(a)(9), which require retention of records for five years from the date the records under those sections are no longer in use.49 The proposed amendments clarified that records of verifiable authorizations, express informed consent or express agreement (collectively, ‘‘consent’’) include a consumer’s name and phone number, a copy of the consent requested in the same manner and format that it was presented to that consumer, a copy of the consent provided, the date the consumer provided consent, and the purpose for which consent was given and received.50 The NPRM also proposed that if the telemarketer or seller requested consent verbally, the copy of consent requested did not require a recording of the conversation. A copy of the telemarketing script would suffice as a complete record of the consent requested. But the NPRM made clear that this proposal only applies to telemarketing calls where no other provision of the TSR requires a recording of consent.51 The proposed amendments also included new format requirements for records containing a phone number, time or call duration; 52 clarified that a 46 Id. 47 Id. 48 Id. at 33680–82. at 33686. 49 Id. 50 Id. at 33686–87. The proposed amendment also stated that for a copy of the consent provided under Sections 310.3(a)(3), 310.4(a)(7), 310.4(b)(1)(iii)(B)(1), or 310.4(b)(1)(v)(A), a complete record must include all of the requirements outlined in those respective sections. 51 2022 NPRM, 87 FR at 33686–87. 52 The proposed amendments required records containing international phone numbers to comport E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations failure to keep each record required under Section 310.5 in a complete and accurate manner constitutes a violation of the TSR; and created a safe harbor for incomplete or inaccurate call detail records where the omission was temporary and inadvertent.53 Finally, the Commission proposed modifying the compliance obligations in Section 310.5(e) to obligate both telemarketers and sellers to keep records if they fail to allocate recordkeeping obligations between themselves.54 khammond on DSKJM1Z7X2PROD with RULES B. B2B Telemarketing The Original TSR exempted B2B calls other than those selling office and cleaning supplies, which the Commission considered the ‘‘most significant business-to-business problem area’’ at the time.55 The Commission stated, however, it would reconsider the B2B exemption if ‘‘additional [B2B] telemarking activities become problems.’’ 56 In 2003, the Commission reconsidered the scope of the B2B exemption and proposed requiring B2B calls selling internet or web services to comply with the TSR because they had become an emerging area for fraud.57 The Commission ultimately decided not to modify the B2B exemption because the Commission wanted to ‘‘move cautiously so as not to chill innovation in the development of cost-efficient with International Telecommunications Union’s Recommendation E.164 format and domestic numbers to comport with the North American Numbering plan. The Commission proposed that records containing time and call duration be kept to the closest whole second, and time must be recorded in Coordinated Universal Time (UTC). Id. at 33687. 53 The Commission proposed a safe harbor for temporary and inadvertent errors in keeping call detail records if the telemarketer or seller can demonstrate that: (1) it has established and implemented procedures to ensure completeness and accuracy of its records under Section 310.5(a)(2); (2) it trained its personnel in the procedures; (3) it monitors compliance and enforces the procedures, and documents its monitoring and enforcement activities; and (4) any failure to keep accurate or complete records under Section 310.5(a)(2) was temporary and inadvertent. Id. at 33687. 54 Id. at 33687. 55 Original TSR, 60 FR at 43861. 56 Id.; see also 2002 Notice of Proposed Rulemaking (‘‘2002 NPRM’’), 67 FR 4492, 4500 (Jan. 30, 2002); 2014 TSR Rule Review, 79 FR at 46738. 57 2002 NPRM, 67 FR at 4500, 4531. ‘‘internet Services’’ meant any service that allowed a business to access the internet, including internet service providers, providers of software and telephone or cable connections, as well as services that provide access to email, file transfers, websites, and newsgroups. Id. ‘‘Web services’’ was defined as ‘‘designing, building, creating, publishing, maintaining, providing, or hosting a website on the internet.’’ Id. The Commission intended for the term internet services to encompass any and all services related to accessing the internet and the term web services to encompass any and all services related to operating a website. Id. VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 methods for small businesses to join in the internet marketing revolution.’’ 58 But the Commission again noted it would ‘‘continue to monitor closely’’ the B2B telemarketing practices in this area and ‘‘may revisit the issue in subsequent Rule Reviews should circumstances warrant.’’ 59 Since 2003, the Commission has continued to see small business harmed by numerous types of deceptive B2B telemarketing schemes,60 including those selling business directory listings,61 web hosting or design services,62 search engine optimization services,63 market-specific advertising 58 2003 TSR Amendments, 68 FR at 4663. 59 Id. 60 A 2018 survey conducted by the Better Business Bureau revealed that the same scams that harm consumers, such as tech support scams and imposter scams, also harm small businesses, and that 57% of scams that impact small businesses are perpetrated through telemarketing. Better Business Bureau, Scams and Your Small Business Research Report, at 9–10 (June 2018), available at https:// www.bbb.org/SmallBizScams (last visited Dec. 11, 2023). 61 See, e.g., FTC v. Your Yellow Book Inc., No. 14–cv–786–D (W.D. Ok. July 24, 2014), available at https://www.ftc.gov/system/files/documents/cases/ 140807youryellowbookcmpt.pdf (last visited Dec. 11, 2023); FTC v. OnlineYellowPagesToday.com, Inc., No. 14–cv–0838 RAJ (W.D. Wash. June 9, 2014), available at https://www.ftc.gov/system/files/ documents/cases/140717onlineyellowpages cmpt.pdf (last visited Dec. 11, 2023); FTC v. Modern Tech. Inc., et al., No. 13–cv–8257 (Nov. 18, 2013) available at https://www.ftc.gov/sites/default/files/ documents/cases/131119yellowpagescmpt.pdf (last visited Dec. 11, 2023); FTC v. 6555381 Canada Inc. d/b/a Reed Publishing, No. 09–cv–3158 (N.D. Ill. May 27, 2009) available at https://www.ftc.gov/ sites/default/files/documents/cases/2009/06/ 090602reedcmpt.pdf (last visited Dec. 11, 2023); FTC v. 6654916 Canada Inc. d/b/a Nat’l. Yellow Pages Online, Inc., No. 09–cv–3159 (N.D. Ill. May 27, 2009), available at https://www.ftc.gov/sites/ default/files/documents/cases/2009/06/090602 nypocmpt.pdf (last visited Dec. 11, 2023); FTC v. Integration Media, Inc., No. 09–cv–3160 (N.D. Ill. May 27, 2009), available at https://www.ftc.gov/ sites/default/files/documents/cases/2009/06/ 090602goamcmpt.pdf (last visited Dec. 11, 2023); FTC v. Datacom Mktg. Inc., et al., No. 06–cv–2574 (N.D. Ill. May 9, 2006), available at https:// www.ftc.gov/sites/default/files/documents/cases/ 2006/05/060509datacomcomplaint.pdf (last visited Dec. 11, 2023); FTC v. Datatech Commc’ns, Inc., No. 03–cv–6249 (N.D. Ill. Aug. 3, 2005) (filing amended complaint), available at https:// www.ftc.gov/sites/default/files/documents/cases/ 2005/08/050825compdatatech.pdf (last visited Dec. 11, 2023); FTC v. Ambus Registry, Inc., No. 03–cv– 1294 RBL (W.D. Wash. June 16, 2003), available at https://www.ftc.gov/sites/default/files/documents/ cases/2003/07/ambuscomp.pdf (last visited Dec. 11, 2023). 62 See FTC v. Epixtar Corp., et al., No. 03–cv– 8511(DAB) (S.D.N.Y. Nov. 3, 2003), available at https://www.ftc.gov/sites/default/files/documents/ cases/2003/11/031103comp0323124.pdf (last visited Dec. 11, 2023); FTC v. Mercury Mktg. of Del., Inc., No. 00–cv–3281 (E.D. Pa. Aug. 12, 2003) (filing for an Order to Show Cause Why Defendants Should Not be Held in Contempt), available at https://www.ftc.gov/sites/default/files/documents/ cases/2003/08/030812contempmercury marketing.pdf (last visited Dec. 11, 2023). 63 See, e.g., FTC v. Pointbreak Media, LLC, No. 18–cv–61017–CMA (S.D. Fla. May 7, 2018), PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 26763 opportunities,64 payment processing services,65 and schemes that impersonate the government.66 For example, some of these schemes were the subject of a coordinated FTC-led crackdown on scams targeting small businesses, called ‘‘Operation Main Street,’’ announced in June 2018.67 To address these scams, the 2022 NPRM proposed applying the TSR’s prohibitions against misrepresentations, as articulated in Sections 310.3(a)(2) and 310.3(a)(4), to B2B telemarketing. Specifically, sellers and telemarketers would be prohibited from making: (1) several types of material misrepresentations in the sale of goods or services; and (2) false or misleading statements to induce a person to pay for goods or services or to induce a charitable contribution (collectively, ‘‘misrepresentations’’).68 The 2022 NPRM did not propose applying any other provisions of the TSR to B2B calls, such as recordkeeping, DNC Registry, or DNC fee access requirements.69 C. New Definition for ‘‘Previous Donor’’ The 2022 NPRM proposed adding a new definition for the term ‘‘previous donor’’ to clarify that telemarketers are prohibited from making charity robocalls unless the consumer donated to the soliciting charity within the last two years. When the Commission amended the TSR to prohibit robocalls available at https://www.ftc.gov/system/files/ documents/cases/matter_1723182_pointbreak_ complaint.pdf (last visited Dec. 11, 2023); FTC v. 7051620 Canada, Inc. No. 14–cv–22132 (S.D. Fla. June 9, 2014), available at https://www.ftc.gov/ system/files/documents/cases/140717national busadcmpt.pdf (last visited Dec. 11, 2023). 64 See, e.g., FTC v. Prod. Media Co., No. 20–cv– 00143–BR (D. Or. Jan. 23, 2020), available at https://www.ftc.gov/system/files/documents/cases/ production_media_complaint.pdf (last visited Dec. 11, 2023). 65 See, e.g., FTC v. First Am. Payment Sys., LP, et al., No. 4:22–cv–00654 (E.D. Tex. July 29, 2022), available at https://www.ftc.gov/system/files/ftc_ gov/pdf/Complaint%20%28file%20stamped%29_ 0.pdf (last visited Dec. 11, 2023). 66 See, e.g., FTC v. DOTAuthority.com, No. 16– cv–62186 (S.D. Fla. Sept. 13, 2016) available at https://www.ftc.gov/system/files/documents/cases/ 162017dotauthoriity-cmpt.pdf (last visited Dec. 11, 2023); FTC v. D & S Mktg. Sols. LLC, No. 16–cv– 01435–MSS–AAS (M.D. Fla. June 6, 2016), available at https://www.ftc.gov/system/files/ documents/cases/160621dsmarketingcmpt.pdf (last visited Dec. 11, 2023). 67 See Press Release, FTC, BBB, and Law Enforcement Partners Announce Results of Operation Main Street: Stopping Small Business Scams Law Enforcement and Education Initiative (June 18, 2018), available at https://www.ftc.gov/ news-events/press-releases/2018/06/ftc-bbb-lawenforcement-partners-announce-results-operationmain (last visited Dec. 11, 2023). 68 2022 NPRM, 87 FR at 33682–84. 69 Id.; see also 16 CFR 310.5 (recordkeeping requirements); 310.8 (fee for access to the Do Not Call Registry). E:\FR\FM\16APR1.SGM 16APR1 26764 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations in 2008,70 it included a narrow exemption allowing charity robocalls to prior donors, recognizing a charity’s strong interest in reaching consumers with ‘‘whom the charity has an existing relationship—i.e. members of, or previous donors to[,] the non-profit organization on whose behalf the calls are made.’’ 71 The Commission meant to limit the exemption to consumers with actual relationships to the soliciting organization, because allowing ‘‘telefunders to make impersonal prerecorded cold calls on behalf of charities that have no prior relationship with the call recipients . . . would defeat the amendment’s purpose of protecting consumers’ privacy.’’ 72 But in creating the exemption, the Commission did not update the definition of ‘‘donor’’ or include a definition of ‘‘previous donor.’’ Because ‘‘donor’’ is defined as ‘‘any person solicited to make a charitable contribution,’’ 73 the Commission’s 2008 Amendment could be misinterpreted as allowing a telemarketer to send robocalls to any consumer it had previously solicited for a donation on behalf of a charity, regardless of whether the consumer donated to or has an existing relationship with that charity. Adding a definition for ‘‘previous donor’’ makes clear a seller or telemarketer may only make charity robocalls to a donor who has previously provided a charitable contribution to that particular charity within the last two years.74 70 2008 TSR Amendments, 73 FR at 51164. at 51193. 72 Id. at 51194. 73 16 CFR 310.2(p). The Commission declined to limit the definition of donor to those who have ‘‘an established business relationship with the nonprofit charitable organization’’ because it wanted the term ‘‘[to] encompass not only those who have agreed to make a charitable contribution but also any person who is solicited to do so, to be consistent with [the Rule’s] use of the term ‘customer.’ ’’ 2003 TSR Amendments 68 FR at 4590. 74 The Commission proposed that the definition of ‘‘previous donor’’ be limited to those who donated to a charity within the past two years so that consumers will not receive robocalls in perpetuity from organizations to which they have donated. The Commission chose two years to account for the possibility that consumers who donate annually may not necessarily donate exactly one year apart. 2022 NPRM, 87 FR at 33688. khammond on DSKJM1Z7X2PROD with RULES 71 Id. VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 D. Overview of Public Comments Received in Response to the 2022 NPRM In response to the 2022 NPRM,75 the Commission received 26 comments 76 representing the views of State governments,77 consumer groups,78 consumers,79 industry trade associations,80 and businesses.81 The vast majority of the comments focused on the proposed recordkeeping amendments. Commenters on behalf of government, individual consumers, and consumer advocacy groups generally supported amending the recordkeeping requirements but also submitted suggestions for additional amendments.82 Industry groups and 75 The Commission also received 114 unique comments in response to the 2014 Rule Review reflecting the opinions of State and Federal agencies, consumer advocacy groups, consumers, academics, and industry. 2022 ANPR, 87 FR at 33664. The comments addressing whether the Commission should amend the TSR’s recordkeeping provisions are summarized in the 2022 NPRM. 2022 NPRM, 87 FR at 33682. 76 Many commenters filed one comment in response to the 2022 ANPR or 2022 NPRM that addressed issues raised by both documents. Comments regarding the proposals in the 2022 NPRM will be addressed in this Final Rule. Comments regarding the proposals in the 2022 ANPR will be addressed in the Notice of Proposed Rulemaking that the Commission is issuing concurrently with this Final Rule (‘‘2024 NPRM’’). We cite public comments by name of the commenting organization or individual, the rulemaking (ANPR comments were assigned ‘‘33’’ and the NPRM comments were assigned ‘‘34’’), and the comment number. All comments submitted can be found at www.regulations.gov. 77 National Association of Attorneys General on behalf of 43 State Attorneys General (‘‘NAAG’’) 34– 20. 78 World Privacy Forum (‘‘WPF’’) 34–21; Electronic Privacy and Information Center, National Consumer Law Center (on behalf of its low-income clients), Center for Digital Democracy, Consumer Action, Consumer Federation of America, FoolProof, Mountain State Justice, New Jersey Citizen Action, Patient Privacy Rights, Public Good Law Center, Public Knowledge, South Carolina Appleseed Legal Justice Center, and Cathy Lesser Mansfield (Senior Instructor in Law at Case Western Reserve University School of Law) (‘‘EPIC’’) 34–23. 79 Bradley 34–15; Cassady 34–2; Chen 34–9; Kreutzmann 34–5, Yang 34–12, and 4 Anonymous submitters at 34–3, 34–4, 34–7, and 34–11. Four commenters submitted consumer complaints or were not relevant to the proceeding. See Anonymous 34–6, 34–8, and 34–16; and Grener 34– 10. 80 Enterprise Communications Advocacy Coalition (‘‘ECAC’’) 34–22; National Federation of Independent Business 33–4 (‘‘NFIB’’); Ohio Credit Union League (‘‘OCUL’’) 34–19; Professional Association for Customer Engagement 33–15 (‘‘PACE’’); Revenue Based Finance Coalition(‘‘RBFC’’) 34–13; Third Party Payment Processors Association (‘‘TPPPA’’) 34–14; US Chamber of Commerce (‘‘Chamber’’) 34–24; and USTelecom—The Broadband Association (‘‘USTelecom’’) 33–14. 81 Rapid Financial Services, LLC and Small Business Financial Solutions, LLC (‘‘Rapid Finance’’) 34–17; Sirius XM Radio (‘‘Sirius’’) 34–18. 82 Many of the consumer comments generally stated that they supported the recordkeeping amendments because they would help protect PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 businesses had mixed comments. Some commenters did not support any recordkeeping amendments, citing the burden they would impose, while others were generally supportive or supportive of specific proposed amendments.83 Similarly, industry groups and businesses did not support applying the TSR’s prohibitions against deceptive telemarketing to B2B calls; while government, individual consumers, and consumer organizations were supportive. Only three comments touched on the proposed amendment to add a new definition of ‘‘previous donor.’’ The comments and the basis for the Commission’s adoption or rejection of the commenters’ suggested modifications to the proposed amendments are analyzed in Section III below. III. Final Amended Rule The Commission has carefully reviewed and analyzed the record developed in this proceeding.84 The record, which includes the Commission’s law enforcement experience and that of its State and Federal counterparts, support the Commission’s view the proposed amendments in the 2022 NPRM are necessary and appropriate to protect consumers, including small businesses, from deceptive or abusive telemarketing practices and ensure the Commission and other regulators can effectively and efficiently enforce the TSR.85 The Final Rule requires sellers and telemarketers to keep additional records of their telemarketing activities, prohibits misrepresentations in B2B telemarketing, and adds a new definition for previous donor. The Final Rule also implements several other clerical modifications as originally proposed in the 2022 NPRM.86 In some instances, the Commission has clarified or made modifications to its original proposal in response to the public comments submitted. The consumers from deceptive telemarketing and with enforcing the TSR. See, e.g., Cassady 34–3; Chen 34–9; and Anonymous 34–11 and 34–3. One commenter generally urged more enforcement and larger penalties. Kowalski 33–7. 83 One anonymous commenter did not support any recordkeeping because it required collection of too much data, which the commenter believed infringed on a consumer’s privacy. Anonymous 34– 4. 84 The record includes the 2014 Rule Review, the 2022 NPRM, 2022 ANPR, and the law enforcement cases and experience referenced therein, which are hereby incorporated by reference. 85 The Commission’s decision to amend the Rule is made pursuant to the rulemaking authority granted by the Telemarketing Act to protect consumers, including small businesses, from deceptive or abusive practices. 15 U.S.C. 6102(a). 86 2022 NPRM, 87 FR at 33688. E:\FR\FM\16APR1.SGM 16APR1 khammond on DSKJM1Z7X2PROD with RULES Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations Commission otherwise adopts the amendments proposed in the 2022 NPRM as set forth in Section VII— Congressional Review Act (‘‘Final Rule’’) below. The primary modifications and clarifications between the proposed rule published in the 2022 NPRM and the Final Rule are: • The term ‘‘prerecorded message’’ includes telemarketing calls made using ‘‘digital soundboard’’ rather than ‘‘soundboard technology’’ to make clear the term includes any digital or sound technologies that sellers or telemarketers use to convey a verbal message to a consumer in telemarketing; • Telemarketers and sellers will have one hundred and eighty days after the Final Rule is published to implement any new systems, software, or procedures necessary to comply with the new requirement that they keep call detail records under Section 310.5(a)(2); • Sellers and telemarketers need not retain records of the calling number, called number, date, time, duration, and disposition of telemarketing calls under Sections 310.5(a)(2)(vii) and (x) for any calls made by an individual telemarketer who manually enters a single telephone number to initiate a call to that telephone number. Such sellers and telemarketers, however, must still comply with the other requirements under Section 310.5(a)(2); • Modified Section 310.4(b)(2) to state it is also an abusive telemarketing act or practice and a violation of the TSR for any person to sell, rent, lease, purchase, or use any list established to comply with the TSR’s recordkeeping requirements under Section 310.5. This modification makes clear telemarketers and sellers cannot use any consumer lists created for recordkeeping purposes for any other purpose; • In obtaining written consent to contact a consumer using robocalls on behalf of a ‘‘specific seller,’’ the written agreement must identify the ‘‘specific seller’’ by its legal entity name to make clear that any agreement to receive robocalls is limited to that legal entity. The seller or telemarketer obtaining consent from the consumer must ensure the consumer understands which legal entity they have authorized to send robocalls; • Where no provision of the TSR requires a recording of the call, the Final Rule modifies what was proposed in the NPRM and now states a complete record of consent that is verbally requested must include a recording of the consent requested as well as the consent provided, and that recording must make clear the purpose for which consent was provided; VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 • Service providers referenced under Section 310.5(a)(9) include any entity that provides ‘‘digital soundboard’’ technology rather than ‘‘soundboard technology platforms’’ to make clear sellers and telemarketers must retain records of any entity that provides any digital or sound technologies sellers or telemarketers use to convey a verbal message to a consumer in telemarketing; • Sellers and telemarketers must retain records of their service providers under Section 310.5(a)(9) for five years from the date the contract expires; • For records of the entity-specific DNC list under Section 310.5(a)(10), sellers and telemarketers must retain a record of the telemarketing entity that made the call and not the individual telemarketer; • Under Section 310.5(a)(11), sellers and telemarketers need only retain records of which version of the FTC DNC Registry they used to comply with the TSR rather than the version itself. A record of which version used includes: (1) the name of the entity which accessed the registry; (2) the date the DNC Registry was accessed; (3) the subscription account number that was used to access the registry; and (4) the telemarketing campaign(s) for which it was accessed; • The new formatting requirements under Section 310.5(b) apply to new records created after the Final Rule goes into effect; • The safe harbor to retain call detail records under Section 310.5(a)(2) will grant sellers and telemarketers thirty days to correct any inadvertent errors from the date of discovery, if the seller or telemarketer who made the error otherwise complies with the other provisions of the safe harbor; and • Under Section 310.5(e), sellers who delegate recordkeeping responsibilities to a telemarketer must also retain access rights to those records so the seller can produce responsive records in the event it has hired a telemarketer overseas. A. Recordkeeping Requirements The Final Rule requires sellers and telemarketers to maintain additional records that, in the Commission’s law enforcement experience, are difficult for the Commission to obtain but are necessary to ensure compliance with the TSR.87 The Final Rule also clearly defines the information telemarketers or sellers must retain to comply with existing provisions and specifies the records needed to assert an exemption or affirmative defense to the TSR. In this 87 The Telemarketing Act authorizes the Commission to include recordkeeping requirements in the Rule. 15 U.S.C. 6102(a)(3). PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 26765 section, the Commission details the public comments it received in response to each proposed amendment to the recordkeeping requirements, and the Commission’s response. 1. Section 310.5(a)(1)—Substantially Different Advertising Materials and Each Unique Prerecorded Message Section 310.5(a)(1) currently requires sellers and telemarketers to keep records of ‘‘all substantially different advertising, brochures, telemarketing scripts, and promotional materials.’’ The 2022 NPRM proposed modifying Section 310.5(a)(1) to require retention of a copy of each unique robocall, including each call a telemarketer makes using soundboard technology.88 The Commission received five public comments addressing this proposal. The Enterprise Communications Advocacy Coalition (‘‘ECAC’’) and Sirius XM Radio (‘‘Sirius’’) object to this proposed amendment, stating it would be overly burdensome. Sirius states requiring the retention of each unique robocall would ‘‘generate massive amounts of data that then needs to be searched, analyzed, secured, and retained, and will be extremely burdensome.’’ 89 ECAC claims robocalls are ‘‘typically stored as .wav files that are significantly larger than text files. While storage costs may have decreased over time, the expense associated with the storage of these large .wav files will be a significant burden on lawful telemarketers.’’ 90 The National Association of Attorneys General (on behalf of 43 State Attorneys General) (‘‘NAAG’’), Professional Association for Customer Engagement (‘‘PACE’’), and World Privacy Forum (‘‘WPF’’) all state they generally support this amendment.91 PACE further states their members ‘‘often keep copies of [each unique robocall] despite the TSR currently not requiring businesses to do so. Retaining these records will protect American consumers, who receive countless prerecorded messages, and protect companies, who will be able to prove compliance with the TSR.’’ 92 The Commission is not persuaded by ECAC’s and Sirius’ arguments. In the Commission’s experience, robocalls are typically of short duration and the file sizes are minimal. As ECAC notes, the cost of storage may be decreasing every 88 The 2022 NPRM also proposed changing the records retention period under this provision from two years to five years from the date that the records are no longer in use. See infra Section III.A.10 (Time Period to Keep Records). 89 Sirius 34–18 at 8. 90 ECAC 34–22 at 2. 91 NAAG 34–20 at 3–4; PACE 33–15 at 2; WPF 34–21 at 2. 92 PACE 33–15 at 2. E:\FR\FM\16APR1.SGM 16APR1 khammond on DSKJM1Z7X2PROD with RULES 26766 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations year. Moreover, the Commission proposed requiring a copy of each unique robocall, not every robocall used. Finally, as some commenters have stated,93 businesses typically keep these records in the ordinary course of business. In the FTC’s law enforcement experience, records of each unique prerecorded message are necessary for the Commission to ensure compliance with the TSR, and requiring retention of each unique robocall should not impose an undue burden. With respect to calls utilizing soundboard technology, the Commission sought comment on the burden that may be imposed by requiring sellers or telemarketers to keep each unique prerecorded message involving the use of soundboard technology, including how many telemarketers employ soundboard technology in telemarketing, how many calls they make using soundboard technology, the average duration of each call, and whether the telemarketer typically keeps recordings of such calls in the ordinary course of business.94 The FTC’s law enforcement experience demonstrates the use of soundboard technology is ongoing. The Commission did not receive any public comments regarding this issue. WPF did note, however, the Commission should be mindful of using technological language that is broad enough to encompass a variety of digital and other sound technologies and recommended the use of the term ‘‘digital soundboard’’ in lieu of ‘‘soundboard technology.’’ 95 In light of this recommendation, the Commission states that the term ‘‘prerecorded message’’ includes telemarketing calls made using ‘‘digital soundboard’’ rather than ‘‘soundboard technology’’ to make clear the term includes any digital or sound technologies that sellers or telemarketers use to convey a verbal message to a consumer in telemarketing. Some digital soundboard technologies allow a seller or telemarketer to mimic or clone the voice of a specific individual and calls using this technology would be subject to this provision of the TSR to the extent that the mimic or cloning creates a prerecorded message that is used in telemarketing. WPF also ‘‘encourage[s] the FTC to require telemarketers to keep a copy of the full range of materials involved in the advertising campaign, including transcripts.’’ 96 The Commission notes 93 See, e.g., PACE 33–15 at 2. NPRM, 87 FR at 33689. 95 WPF 34–21 at 2. 96 Id. 94 2022 VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 the TSR’s recordkeeping provisions already require telemarketers and sellers to retain a copy of each substantially different advertising, brochure, telemarketing script, and promotional material.97 The 2022 NPRM simply clarified telemarketing scripts include robocall and upsell scripts, and the failure to keep one substantially different version of each record under Section 310.5(a)(1) is a violation of the TSR.98 2. Section 310.5(a)(2)—Call Detail Records The 2022 NPRM proposed adding Section 310.5(a)(2) to require retention of call detail records, including, for each call a telemarketer places or receives: the calling number; called number; time, date, and duration of the call; and the disposition of the call, such as whether the call was answered, dropped, transferred, or connected. For transfers, the record included the phone number or IP address the call was transferred to and the company name, if transferred to a company different from the seller or telemarketer that placed the call. The 2022 NPRM also required the retention of other records regarding the nature and purpose of each call including: (1) the telemarketer who placed or received each call; (2) the seller or charity for which the telemarketing call is placed or received; (3) the good, service, or charitable purpose that is the subject of the call; (4) whether the call is to a consumer or business, utilizes robocalls, or is an outbound call; and (5) the telemarketing script(s) and robocall (if applicable) that was used in the call. Finally, the 2022 NPRM required retention of records regarding the caller ID transmitted for outbound calls, including the name and phone number transmitted, and records of the telemarketer’s authorization to use that phone number and name. The Commission received eight comments regarding this proposal. ECAC,99 the National Federation of Independent Businesses (‘‘NFIB’’),100 and Sirius 101 objected, stating that compliance with this provision would impose enormous expense on businesses engaged in lawful telemarketing.102 ECAC states its 97 16 CFR 310.5(a)(1). NPRM, 87 FR at 33684. 99 ECAC 34–22 at 3. 100 NFIB 33–4 at 4–5. 101 Sirius 34–18 at 7. 102 OCUL also generally objects to the proposed recordkeeping requirements as overly burdensome, stating it would require a significant investment to collect and retain new data points in a constricted time frame. OCUL 34–19 at 2. 98 2022 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 members ‘‘make hundreds of millions of calls each year’’ and ‘‘[f]actoring in the size of a CDR file’’ multiplied by the number of calls its members make each year, ‘‘the expense associated with this retention . . . would be massive.’’ 103 ECAC also argues that, while its members likely keep information regarding the nature and purpose of the calls in the ordinary course of business, associating particular scripts with a particular call is unworkable because ‘‘well-trained telemarketers are able to deviate from scripts or not use them at all’’ and ‘‘scripts are constantly changing and evolving to reflect consumer questions and concerns.’’ 104 Sirius argues the Commission’s ‘‘overly prescriptive’’ approach would impair a business’s ability to adapt to Other commenters generally objected to the recordkeeping amendments, arguing that they require telemarketers and sellers to retain more information than they would in the ordinary course of business and are ‘‘contrary to data minimization principles’’ articulated by the Commission elsewhere. See, e.g., Sirius 34–18 at 2, 4–6; NFIB 33–4 at 3–4. The Commission interprets these arguments to refer to the new requirement that sellers and telemarketers retain call detail records. NFIB lists other categories in their comment as examples of burden, such as records of established business relationships, customer lists, consent, and entity-specific DNCs or versions of the FTC’s DNC Registry. NFIB 33–4 at 3–4. None of these categories, however, is new, and the TSR has always required telemarketers and sellers to keep these records. See, e.g., 16 CFR 310.5(a)(3) and (5) (requiring records of consent and customer lists); 310.4(b)(3)(iii) and (iv) (requiring records of an entity-specific DNC or a version of the FTC’s DNC Registry that a seller or telemarketer used to qualify for the safe harbor provisions); see also 2015 TSR Amendments, 80 FR at 77554 (stating the seller or telemarketer bears the burden of demonstrating the seller has an existing relationship with a customer whose number is on the DNC). The Commission notes that the call detail records primarily reflect sellers’ and telemarketers’ business practices rather than implicate any consumer information. The only new items of consumer information that sellers and telemarketers are required to retain under the new recordkeeping amendments are a consumer’s phone number and the option to retain the consumer’s last known email address rather than a physical address. See proposed amendments under Sections 310.5(a)(2) (call detail records); (a)(3) (prize recipients); (a)(4) (customer records); and (a)(6) (previous donor). As explained in the 2022 NPRM, the Commission believes that telemarketers and sellers likely retain this information in the ordinary course of business. 2022 NPRM, 87 FR at 33684–85. Furthermore, they must already retain consumers’ phone numbers to comply with the entity-specific DNC requirements. As discussed in additional detail in Section III.A.3—Prize Recipients and Customer Records, the Commission will prohibit use of any records created to comply with the TSR’s recordkeeping requirements for any other purpose. 103 ECAC 34–22 at 3. 104 Id. at 4. The Commission does not find ECAC’s argument persuasive. Even if a telemarketer deviates from a script, fails to use the script, or the company constantly updates the scripts, there is still a script associated with a particular call and in the Commission’s law enforcement experience, telemarketers typically retain that information in the ordinary course of business. E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES changing market conditions and a company’s ability to innovate. It would also impose ‘‘significant administrative burdens’’ and ‘‘substantial transactional costs’’ on sellers and telemarketers to establish contracts and systems to capture the information requested.105 And NFIB argues sellers and telemarketers would ‘‘incur substantial costs to: (1) establish in-house, or purchase from others, systems designed and built to accomplish the newlymandated, extraordinarily-detailed recordkeeping, and (2) employ personnel to maintain and operate the systems.’’ 106 At minimum, Sirius requests the Commission allow a ‘‘phase-in’’ period of a few years to allow companies sufficient time to adjust agreements, implement new systems, and build compliance plans.107 The Electronic Privacy and Information Center (on behalf of 13 advocacy groups) (‘‘EPIC’’), NAAG, WPF, and an individual consumer, all support the proposed amendments.108 NAAG echoed the Commission’s law enforcement experience and agreed the amendments are necessary to ensure compliance with the TSR and should not be overly burdensome to create and maintain these records.109 EPIC stated they ‘‘strongly support’’ the amendment which rectifies ‘‘a major weakness in the existing rule’’ of requiring retention of only ‘‘prizes awarded and sales’’ which are of ‘‘little use in identifying violations of the do-not-call rule’’ without accompanying records of calls.110 EPIC particularly applauded the amendment requiring retention of any caller ID information transmitted and the telemarketer’s authorization to use that caller ID because spoofing has undermined consumers’ faith in the U.S. telecommunication system, making it harder for emergency calls to reach consumers.111 WPF and NAAG also commented that requiring records of call transfers and the identity of the recipient of those transfers is particularly important because it is ‘‘otherwise impossible to trace fraudulent activity’’ when transfers typically appear as a separate inbound call to the recipient in the voice provider’s call records.112 The individual consumer stated retaining call detail records was necessary to enforce the TSR and ‘‘a fair 105 Sirius 34–18 at 7–8. 33–4 at 5. 107 Sirius 34–18 at 8. 108 Cassady 34–2; EPIC 34–23 at 4; NAAG 34–20 at 5; WPF 34–21 at 2. 109 NAAG 34–20 at 5. 110 EPIC 34–23 at 4. 111 Id. 112 WPF 34–21 at 2; NAAG 34–20 at 6. 106 NFIB VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 compromise’’ in comparison to requiring recordings of all telemarketing transactions which would be overly burdensome to small businesses.113 PACE notes some of its members are able to maintain the requested records and already do so in the ordinary course of business, but the proposed amendments may not be technically feasible for all members, particularly those who do not use software to engage in telemarketing but use employees in retail locations.114 PACE members raised particular concerns about the technical capacity to record ‘‘the duration of the call, disposition of the call, and to whom the call was transferred.’’ 115 As explained in the 2022 NPRM, the proposed addition of Section 310.5(a)(2) is necessary for the Commission to determine whether the TSR applies and which sections of the TSR the seller and telemarketer must comply with for a telemarketing campaign.116 The Commission is cognizant this amendment will require some administrative costs in establishing a new recordkeeping system. In the 2022 NPRM, the Commission provided an estimate of those costs and invited comment about those estimates,117 but did not receive any public comment specifically disputing its estimates. Nevertheless, in determining whether to implement the proposed amendments, the Commission considers whether the proposed amendments strike an appropriate balance between the goal of protecting consumers from deceptive or abusive telemarketing and the harm from imposing compliance burdens. To address the concerns raised by the public comments, the Commission will provide a grace period of one hundred and eighty days from the date Section 310.5(a)(2) is published in the Federal Register for sellers and telemarketers to implement any new systems, software, or procedures necessary to comply with this new provision. Furthermore, the Commission will modify this amendment and provide an exemption for calls made by an individual telemarketer who manually enters a single telephone number to initiate a call. For such calls, the seller or telemarketer need not retain records of the calling number, called number, date, time, duration, and disposition of the telemarketing call under Sections 310.5(a)(2)(vii) and (x) but must otherwise comply with the other 113 Cassady 114 PACE 34–2. 33–15 at 2. 115 Id. 116 2022 117 2022 PO 00000 NPRM, 87 FR at 33680–82, 33684. NPRM, 87 FR at 33690–91. Frm 00013 Fmt 4700 Sfmt 4700 26767 requirements under Section 310.5(a)(2). Making this modification should alleviate the general concerns commenters have raised regarding the feasibility and burden of creating and retaining call detail records. The Commission is not persuaded that requiring sellers and telemarketers to retain call detail records of their telemarketing campaigns would impose an undue burden if the seller or telemarketer can use automated mechanisms to conduct their campaigns instead of placing calls manually. In those situations, as PACE notes, the seller or telemarketer already maintains similar call detail records in the ordinary course of business.118 Nor is the Commission persuaded by Sirius’ arguments that the proposed amendments are overly prescriptive and requiring retention of these records would stifle innovation. The proposed amendments merely identify the information sellers and telemarketers must retain. It does not dictate the form or ‘‘look and feel’’ of business records as Sirius’ suggests. As discussed in more detail in Section III.A.11—Format of Records, the Commission believes the amendment to Section 310.5(a)(2) strikes the appropriate balance between providing specificity about the information sellers and telemarketers are required to keep without prescribing how it must do so. EPIC and WPF’s comments also suggested additional modifications to Section 310.5(a)(2). WPF requested the Commission consider requiring sellers and telemarketers to retain records of their use of voice biometrics in call centers, including whether voice biometrics recognition or voice emotion analysis software was used, whether a consumer’s records were marked with any inferences from any voice biometric analysis, and whether that analysis was shared with any other parties.119 The FTC’s Policy Statement on Biometric Information notes significant privacy concerns regarding the collection and use of biometric information and the possibility such practices may be considered an ‘‘unfair’’ practice under Section 5 of the FTC Act.120 Furthermore, the collection and use of such information might be considered abusive and violative of a consumer’s right to privacy, which Congress gave the Commission the power to regulate 118 PACE 33–15 at 2. 34–21 at 2. 120 FTC, Policy Statement of the Federal Trade Commission on Biometric Information and Section 5 of the Federal Trade Commission Act (May 18, 2023), available at https://www.ftc.gov/system/files/ ftc_gov/pdf/p225402biometricpolicystatement.pdf (last visited Jan 24, 2024). 119 WPF E:\FR\FM\16APR1.SGM 16APR1 26768 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES with respect to telemarketing.121 Although the Commission does not believe it has the evidence now either to require the retention of voice biometric recognition data in telemarketing or place restrictions on its use, it will continue to monitor voice biometric use in telemarketing. EPIC requested the Commission consider requiring telemarketers and sellers to also retain records of campaign IDs for each call, arguing it is necessary to tie the call detail records to a particular campaign.122 The Commission recognizes the concern EPIC has raised and addressed it by requiring sellers and telemarketers to retain records that identify, for each call, the nature and purpose of that call, such as the seller or soliciting charity for whom the telemarketing call was placed, the good or service sold or the charitable purpose of the call, and the telemarketing script or the robocall recording that was used. This information is at least as comprehensive as a campaign ID. The Commission believes specifying the substantive information sellers and telemarketers are required to retain, rather than identifying a particular data category such as campaign ID that may be subject to change over time, will more effectively enable the Commission and other regulators to enforce the TSR. Finally, EPIC requested the Commission consider requiring sellers and telemarketers to keep records of the originating or gateway telecommunications provider for each campaign, rather than any service provider the telemarketer is in a business relationship with, as the NPRM proposes.123 The Commission believes requiring retention of the call detail records and records of the seller or telemarketer’s service providers strikes an appropriate balance between the Commission’s interest in having sufficient information to enforce the TSR and industry’s concerns regarding burden. 3. Sections 310.5(a)(3) and (4)—Prize Recipients and Customer Records The TSR currently requires telemarketers and sellers to retain the ‘‘name and last known address’’ of each prize recipient.124 The 2022 NPRM proposed requiring sellers and telemarketers to also retain the last known telephone number and physical or email address for each prize recipient. The Commission received 121 15 U.S.C. 6102(a)(1). 34–23 at 5. 122 EPIC 123 Id. 124 16 CFR 310.5(a)(2). VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 three comments regarding this proposal, and all were supportive of the amendment. PACE states it believes this was a ‘‘prudent measure, and many telemarketers and sellers that reward prizes likely already comply with this proposal.’’ 125 NAAG agrees, stating the requirement ‘‘reflects current business practices’’ and telemarketers and sellers ‘‘likely keep such information in the regular course of their business.’’ 126 WPF concurs, but also suggests the Commission consider requiring sellers and telemarketers to retain this data in an encrypted state.127 With respect to ‘‘Customer Records’’ under Section 310.5(a)(4), the TSR requires sellers or telemarketers to retain the ‘‘name and last known address of each customer, the goods or services purchased, the date such goods or services were shipped or provided, and the amount paid by the customer for the goods or services.’’ 128 Similarly, the Commission proposed modifying this provision to account for current business practices and require the retention of the customer’s last known telephone number and the customer’s last known physical address or email address. The Commission also proposed adding the date the consumer purchased the good or service to account for the new requirement that telemarketers and sellers keep records of each consumer with whom a seller intends to assert it has an EBR.129 The Commission received four comments regarding this amendment. NAAG and PACE support this proposal, and agree it is necessary to establish EBR and likely that telemarketers and sellers already retain this information in the ordinary course of business.130 EPIC and WPF, however, do not support this amendment unless the Commission concurrently passes commensurate privacy protections.131 The Commission notes that, as it recognized in the 2022 NPRM, requiring sellers and telemarketers to retain additional personal identifying 125 PACE 33–15 at 4. 34–20 at 9. 127 WPF 34–21 at 3. 128 16 CFR 310.5(a)(3). 129 2022 NPRM, 87 FR at 33686. 130 NAAG 34–20 at 9; PACE 33–15 at 5. 131 EPIC 34–23 at 15; WPF 34–21 at 3. When consumer data is transferred as part of the sale, assignment, or change in ownership, dissolution, or termination of the business, EPIC also urges the Commission to require a successor to acknowledge liability for any TSR violations regarding the calls that those records document. EPIC 34–23 at 15–16. EPIC argues that this will deter a fraudulent seller or telemarketer from shutting their businesses and selling their assets, including customer lists, to a sham successor as a means of evading liability. The Commission does not believe such an amendment is necessary at this time. 126 NAAG PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 information (such as consumers’ names, phone numbers, and either their physical or email address, in combination with goods or services they purchased) may raise privacy concerns.132 The Commission emphasizes once more that sellers and telemarketers have an obligation under Section 5 of the FTC Act to adhere to the commitments they make about their information practices and take reasonable measures to secure consumers’ data.133 But the Commission also recognizes the concerns raised by the comments. It agrees additional protections, similar to those it incorporated into the TSR when it prohibited the sale or use of any lists established or maintained to comply with the TSR’s DNC Registry or entityspecific DNC,134 should also apply to any lists of consumers that sellers or telemarketers create or maintain in order to comply with the amended recordkeeping provisions. Thus, the Commission will amend Section 310.4(b)(2) to state it is also an abusive telemarketing act or practice and a violation of the TSR for any person to sell, rent, lease, purchase, or use any list established to comply with Section 310.5. Amending the TSR to specify that the sale or use of a list created to comply with the recordkeeping provisions is consistent with the Telemarketing Act’s emphasis on privacy protection. The Act authorizes the Commission to regulate ‘‘calls which the reasonable consumer would consider coercive or abusive of such consumer’s right to privacy.’’ 135 The Commission agrees with commenters that consumers would consider it coercive and an abuse of their right to privacy if telemarketers or sellers are allowed to use any consumer information they collect and maintain under the TSR’s recordkeeping provisions for any other purpose. 4. Section 310.5(a)(5)—Established Business Relationship The 2022 NPRM proposed adding Section 310.5(a)(5) to further clarify what records a seller must keep to ‘‘demonstrate that the seller has an established business relationship’’ with a consumer. Specifically, for each consumer with whom a seller asserts it 132 2022 NPRM, 87 FR at 33686. generally Federal Trade Commission 2020 Privacy and Data Security Update, available at https://www.ftc.gov/system/files/documents/ reports/federal-trade-commission-2020-privacydata-security-update/20210524_privacy_and_data_ security_annual_update.pdf (last visited Dec. 11, 2023). 134 2003 TSR Amendments, 68 FR at 4645. 135 15 U.S.C. 6102(a)(3)(A); see also 2002 NPRM, 67 FR at 4510–11. 133 See E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES has an established business relationship, the seller must keep a record of the name and last known phone number of that consumer, the date the consumer submitted an inquiry or application regarding that seller’s goods or services, and the goods or services inquired about.136 The Commission received five comments addressing this proposed amendment. EPIC,137 NAAG, and PACE all support this amendment, agreeing it is necessary for a seller to establish a business relationship with a consumer and it is likely businesses already retain such records.138 The Ohio Credit Union League (‘‘OCUL’’) made a general objection stating it was unclear when a credit union member’s business relationship begins or ends, while Sirius objected on the grounds ‘‘it was unnecessary’’ since ‘‘sellers and telemarketers must already collect information sufficient to demonstrate an established business relationship to use as an affirmative defense.’’ 139 The Commission is not persuaded by either OCUL’s or Sirius’s objections. As the Commission noted in its 2022 NPRM, this requirement only applies if a seller intends to assert it has an established business relationship with a consumer.140 As Sirius notes, sellers 136 A seller may also show it has an established business relationship with a consumer if that consumer purchased, rented, or leased the seller’s goods or services or had a financial transaction with the seller during the 18 months before the date of the telemarketing call. The Commission is modifying the existing recordkeeping provisions to state that records of existing customers should also include the date of the financial transaction to support the existence of an EBR under these circumstances. See Section III.A.3 (Prize Recipients and Customer Records). 137 EPIC also urged the Commission to modify the EBR requirements to include consumers who purchased a good or service from the seller. EPIC 34–23 at 14. The Commission does not believe this is necessary since sellers and telemarketers must already keep records of customers, which includes consumers who purchased a good or service from the seller. 16 CFR 310.5(a)(3). Furthermore, as discussed in Section III.A.3—Prize Recipients and Customer Records above, the Commission is amending the customer records provision to include the date the consumer purchased the good or service to account for the new EBR recordkeeping requirements. EPIC also urges the Commission to consider clarifying that EBR may only be asserted as an affirmative defense if the seller or telemarketer intentionally called the consumer because it has an established business relationship with the consumer. EPIC 34–23 at 15. The TSR does not currently contemplate the use of EBR in this manner but rather allows telemarketers and sellers to call a consumer if the seller can demonstrate it has an EBR with that consumer and otherwise meets other requirements under the TSR. Making any modifications to this framework would require additional consideration. 138 EPIC 34–23 at 15; NAAG 34–20 at 7; and PACE 33–15 at 2–3. 139 OCUL 34–19 at 2; Sirius 34–18 at 5. 140 2022 NPRM, 87 FR at 33685. VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 must already collect this information in the ordinary course of business and thus the amendment should not impose an additional burden. 5. Section 310.5(a)(6)—Previous Donor Similar to the EBR requirements described above, the Commission also proposed adding Section 310.5(a)(6) to clarify that, if a telemarketer intends to assert that a consumer is a previous donor to a particular charity,141 the telemarketer must keep a record, for each such consumer, of the name and last known phone number of that consumer, and the last date the consumer donated to the particular charity. The Commission received two comments on this proposed amendment. NAAG agreed with this proposed amendment, stating it was akin to the proposed amendment for EBR and should not ‘‘impose any undue burden.’’ 142 WPF concurred stating the new recordkeeping provision will ‘‘serve to clarify the exemption for charitable donations.’’ 143 6. Section 310.5(a)(8)—Records of Consent Section 310.5(a)(5) of the TSR requires sellers or telemarketers to keep records of ‘‘[a]ll verifiable authorizations or records of express informed consent or express agreement required to be provided or received under this Rule.’’ The Commission proposed modifying this provision to clarify what constitutes a complete record of consent sufficient for a telemarketer or seller to assert an affirmative defense.144 It wanted to make clear that common practices previously employed by telemarketers or sellers, such as maintaining a list of IP addresses and timestamps as proof of consent, are insufficient to demonstrate that a consumer has, in fact, provided consent to receive robocalls or receive telemarketing calls when the consumer has registered her phone number on the DNC Registry.145 Specifically, the 2022 NPRM proposed that for each consumer from whom a seller or telemarketer states it has obtained consent, sellers or telemarketers must maintain records of that consumer’s name and phone number, a copy of the consent requested in the same manner and format it was presented to that consumer, a copy of the consent provided, the date the 141 The Commission also proposed adding a new definition of ‘‘previous donor.’’ See supra Section II.C. 142 NAAG 34–20 at 7. 143 WPF 34–21 at 1. 144 2022 NPRM, 87 FR 33686–87. 145 Id. at 33681. PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 26769 consumer provided consent, and the purpose for which consent was given and received.146 For a copy of the consent provided under Sections 310.3(a)(3), 310.4(a)(7), 310.4(b)(1)(iii)(B)(1), or 310.4(b)(1)(v)(A), a complete record must also include all of the requirements outlined in those respective sections.147 The 2022 NPRM also stated if consent were requested verbally, a copy of the telemarketing script of the request would suffice as a copy of the consent requested, and a recording of the conversation was not necessary unless another provision of this Rule required it.148 The Commission received four comments regarding this proposed amendment. EPIC, NAAG, PACE, and WPF all generally support the proposed amendment.149 PACE states it ‘‘welcomes these provisions in order to better ascertain what records are necessary to assert an affirmative defense’’ and the proposed records ‘‘flow logically from the TSR.’’ 150 But EPIC, NAAG, and WPF also submitted suggestions on additional amendments, arguing the Commission should implement more stringent requirements. WPF suggests the Commission consider updating how a consumer ‘‘may withdraw or revoke consent, and create responsibilities for telemarketers to provide a clear opportunity to revoke or consent in each communication.’’ 151 EPIC asks the Commission to specify that in identifying the ‘‘specific seller’’ from whom a consumer has provided written express agreement to receive robocalls, the telemarketer or seller must retain records of the ‘‘legal name of the seller whose goods [or] services are being promoted.’’ 152 EPIC believes this will 146 Id. at 33686–87. For example, a copy of the consent provided to receive prerecorded sales messages under Section 310.4(b)(1)(v)(A) must evidence, in writing: (1) the consumer’s name, telephone number, and signature; (2) that the consumer stated she is willing to receive prerecorded messages from or on behalf of a specific seller; (3) that the seller obtained consent only after clearly and conspicuously disclosing that the purpose of the written agreement is to authorize that seller to place prerecorded messages to that consumer; and (4) that the seller did not condition the sale of the relevant good or service on the consumer providing consent to receive prerecorded messages. The TSR also states that a seller must obtain consent from the consumer, and the Commission reiterates that this means a seller must obtain consent directly from the consumer and not through a ‘‘consent farm.’’ 148 2022 NPRM, 98 FR at 33686–87. 149 See EPIC 34–23 at 10–11; NAAG 34–20 at 10; PACE 33–15 at 5; and WPF 34–21 at 3. 150 PACE 33–15 at 5. 151 WPF 34–21 at 3. 152 EPIC 34–23 at 10–13. 147 Id. E:\FR\FM\16APR1.SGM 16APR1 26770 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations ‘‘reduce obfuscation’’ on the ‘‘scope of the consumer’s consent’’ and identify the proper defendant if ‘‘legal action is necessary.’’ 153 The Commission believes WPF’s recommendation is primarily applicable to transactions involving a negative option feature 154 where a consumer may wish to cancel a subscription plan and revoke billing authorization. The Commission published a Notice of Proposed Rulemaking regarding the Negative Option Rule (‘‘Negative Option NPRM’’) on April 24, 2023, which also addresses telemarketing transactions.155 Because the proposed Negative Option Rule would apply a more comprehensive and consistent framework for negative option transactions regardless of the sales medium, the Commission declines to make any further amendments to the TSR to address WPF’s comment at this time. With respect to EPIC’s request regarding the identification of a ‘‘specific seller,’’ the Commission stated in the Statement of Basis and Purpose finalizing the TSR amendments prohibiting robocalls that it used the term ‘‘specific seller’’ to ‘‘make it clear that prerecorded calls may be placed only by or on behalf of the specific seller identified in the agreement.’’ 156 The Commission wanted to ensure any agreement to receive robocalls would be limited to the seller identified in the agreement and could not be transferrable to any other party.157 Requiring companies to use the legal entity name to identify the specific seller in the written agreement is a natural extension of the Commission’s intention in using the term ‘‘specific seller.’’ Thus, the Commission states now that in identifying the specific seller in any written agreement, the seller should use its legal entity name to make clear any agreement to receive robocalls is limited to that specific legal entity. The Commission also states the burden will be on the seller or telemarketer to ensure and prove a consumer understands which specific legal entity would be permitted to send the consumer robocalls. In circumstances where the legal entity’s name may not be recognizable to 153 Id. 154 A khammond on DSKJM1Z7X2PROD with RULES negative option feature is defined as ‘‘an offer or agreement to sell or provide any goods or services, a provision under which a customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.’’ 16 CFR 310.2(w). 155 88 FR 24716 (Apr. 24, 2023). 156 2008 TSR Amendments 73 FR at 51186; see also supra note 147. 157 2008 TSR Amendments 73 FR at 51186. consumers, perhaps because the consumers would recognize a brand or product name but not the legal entity name, the seller or telemarketer may need to take extra steps to ensure the consumer has knowingly agreed to receive robocalls from the specific seller. EPIC also requests the Commission require sellers and telemarketers to ‘‘retain records regarding the owner of the website where consent was purportedly obtained’’ and a record of ‘‘the relevant webform completion, or of some other admissible evidence of the specific consumer providing consent via a specific web page on a specific date/ time.’’ 158 For telemarketers or sellers who obtain consumer consent via a website, the Commission believes the new recordkeeping provision requiring records of ‘‘a copy of the request for consent in the same manner and format in which was presented to that consumer’’ would require a telemarketer or seller to keep a copy of the web page or web pages that were used to request consent from the consumer. The copy of the web page could be maintained as screenshots so long as the screenshot accurately reflects what a consumer viewed in providing consent. Sellers and telemarketers who obtain consent via website will also need to keep ‘‘a copy of the consent provided’’ under the new recordkeeping provisions. The Commission believes a screenshot of the web page a consumer completed to provide consent could satisfy this requirement if the screenshot also accurately reflects what a consumer submitted in providing consent. The Commission declines to specify the format a company must use to keep a copy of consent requested or provided to allow businesses the flexibility of retaining records as they would in the ordinary course of business. Rather, it believes specifying the categories of information required to adequately reflect consent will provide sufficient guidance. The Commission cautions, however, an IP address with a timestamp is not sufficient as a record of consent. The Commission does not believe any additional amendments are necessary at this time.159 EPIC and NAAG also raised concerns regarding the Commission’s statement VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 regarding the records for verbal consent. In the 2022 NPRM, the Commission stated if a seller or telemarketer requests consent verbally, a telemarketing script would suffice as a record of the consent requested as long as no other provision of the TSR required a recording.160 EPIC requests the Commission make clear the reference to verbal consent only applies to billing authorization under Section 310.4(a)(7), and any authorization required to receive robocalls or to receive telemarketing calls to phone numbers on the DNC Registry must be provided in writing. EPIC also raised concerns over whether the Commission’s statement meant that a script is an ‘‘acceptable record of the language the caller used to request consent’’ or if ‘‘the Commission is also suggesting that [a script] is an acceptable record of the consumer’s grant of consent.’’ 161 If the former, EPIC argues using a telemarketing script as a record of the request for consent is insufficient when telemarketers often fail to follow the scripts.162 If the latter, EPIC argues it would ‘‘eviscerate the recordkeeping requirement’’ when the new consent requirements include ‘‘ ‘a copy of the request provided.’ ’’ 163 EPIC also argues allowing a recording of only the consent provided without the actual request for consent would allow the telemarketer or seller to record a series of the ‘‘word ‘yes,’ which would be meaningless without any context.’’ 164 NAAG takes it a step further and urges the Commission to require recordings of the entire telemarketing transaction whenever consent is requested verbally.165 The 2022 NPRM specifies that, with respect to requests for verbal consent where no provision of the TSR requires a recording, a telemarketing script would be sufficient for a copy of the request for consent. It did not propose that a telemarketing script would be sufficient as a record of the consent provided. But the Commission recognizes the concerns raised by NAAG and EPIC, that without a recording of the consent requested, a recording of the request provided would 160 2022 161 EPIC NPRM, 87 FR at 33687. 34–23 at 11. 162 Id. 163 Id. 164 Id. 158 EPIC 34–23 at 12. 159 EPIC also requested that the Commission clarify that the TSR’s language regarding consent is similar to the TCPA’s language regarding consent or that the consent requirements do not ‘‘lower the bar below the current requirements of the TCPA.’’ EPIC 34–23 at 13. The new amendments to the TSR do not alter substantive requirements for consent under the TSR. They merely clarify what records are necessary to maintain proof of consent. PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 165 NAAG 34–20 at 10. NAAG has also urged the Commission to require a recording whenever a telemarketing call includes a negative option offer. NAAG 34–20 at 6. It also requests that the Commission require a full refund if a consumer complains of unauthorized charges and the seller is unable to provide a recording of the transaction as proof of consent. Id. Since the Commission has issued the Negative Option NPRM, the Commission will not address this comment here. E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations be meaningless. Given that industry has stated scripts are not ‘‘set in stone’’ and ‘‘[w]ell-trained telemarketers are able to deviate from scripts or not use them at all,’’ 166 the Commission states that, for a complete record of consent that is requested verbally and where no provision of the TSR requires a recording, a telemarketer or seller must retain a recording of the consent requested as well as the consent provided to comply with proposed Section 310.5(a)(8). In addition, the recording must make clear the purpose for which consent was provided. The Commission does not believe requiring a recording of both the consent requested and provided would result in additional burden to businesses since it believes most businesses would have made a recording of both to comply with the recordkeeping provisions in the ordinary course of business. In further response to NAAG and EPIC’s concern, the Commission does not believe a recording of the entire telemarketing transaction is necessary if it is not otherwise required by another provision of the TSR. To require a recording of the entire transaction whenever consent is requested would effectively require a recording of all telemarketing transactions that are subject to the TSR.167 The Commission reiterates that sellers and telemarketers remain obligated to comply with all requirements outlined in other consent provisions in the TSR.168 For transactions involving preacquired account information, telemarketers and sellers must fulfill the requirements of Section 310.4(a)(7)(i) and (ii), which include recording the entire telemarketing transaction if there is a free-to-pay conversion feature. For consent to receive robocalls or calls to phone numbers on the DNC Registry, telemarketers and sellers must abide by the requirements of Sections 310.4(b)(1)(iii)(B)(1) and (b)(1)(v)(A), respectively, which include obtaining a consumer’s written consent.169 And for telemarketing transactions using certain payment methods, telemarketers and 166 ECAC 34–22 at 4. TSR states it is an abusive practice to ‘‘cause billing information to be submitted for payment, directly or indirectly, without the express informed consent of the customer or donor.’’ 16 CFR 310.4(a)(7). This prohibition applies to all telemarketing transactions subject to the TSR. Thus, requiring a recording of every telemarketing call whenever consent is requested would essentially mean that all telemarketing calls subject to the TSR would need to be recorded. 168 See 16 CFR 310.3(a)(3), 310.4(a)(7), 310.4(b)(1)(iii)(B)(1), and 310.4(b)(1)(v)(A). 169 The Commission reiterates that a seller or telemarketer may not use an oral recording of consent for any provision of the TSR that requires consent to be provided in writing. khammond on DSKJM1Z7X2PROD with RULES 167 The VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 sellers must comply with Section 310.3(a)(3), which includes obtaining a consumer’s authorization to be billed in writing or, if verbal consent is requested, a recording of the transaction that evidences a consumer has received specific information. The Commission reiterates this rule amendment does not modify the requirements for consent outlined in the TSR; rather it clarifies what records must be kept to demonstrate compliance with the existing requirements. 7. Section 310.5(a)(9)—Other Service Providers The Commission proposed requiring sellers and telemarketers to keep records of all service providers the telemarketer uses to deliver an outbound call in their telemarketing campaigns, such as voice providers, autodialers, sub-contracting telemarketers, or soundboard technology platforms. The provision would only apply to the service providers with which the seller or telemarketer has a business relationship, and not to every service provider involved in delivering an outbound call. For each service provider, the seller or telemarketer would keep records of any applicable contracts, the date the contract was signed, and the time period the contract is in effect. The seller or telemarketer would keep such records for five years from the date the contract expires or five years from the date the telemarketing activity covered by the contract ceases, whichever is shorter. The Commission received four comments on this proposal. EPIC, NAAG, PACE, and WPF all support the proposed amendment, but also suggested some modifications.170 WPF repeated its request the Commission use broader terminology than ‘‘soundboard technology platforms’’ in defining service providers.171 EPIC repeated its request the Commission require sellers and telemarketers to also keep records of which service provider they used for each telemarketing campaign to ensure those service providers are also complying with the TSR.172 The Commission clarifies that service providers referenced under this provision include any entity that provides ‘‘digital soundboard’’ technology rather than ‘‘soundboard technology platforms,’’ to make clear that sellers and telemarketers must retain records of any entity that provides any digital or sound 26771 technologies that sellers or telemarketers use to convey a verbal message to a consumer in telemarketing. This includes, for example, service providers that telemarketers or sellers use to mimic or clone the voice of an individual to deliver live and prerecorded outbound telemarketing calls. With respect to EPIC’s concerns of ensuring service providers are also complying with the TSR, as discussed above in Section III.A.2—Call Detail Records, the Commission believes it is not necessary to require records of the service provider used per telemarketing campaign. Requiring retention of all call detail records and records of the service providers used in making outbound telemarketing calls would be sufficient for the Commission and other law enforcement agencies to enforce the TSR and strikes an appropriate balance against industry’s concerns regarding burden. PACE requests the Commission limit this provision to the service providers with which sellers and telemarketers have a direct contractual relationship rather than a ‘‘business relationship.’’ 173 PACE argues it would be unreasonable to expect a seller to maintain records of its telemarketers’ voice providers when the contractual relationship is between the telemarketer and voice provider.174 PACE also asks the Commission limit the five year retention time period from the date the contract expires rather than when the telemarketing activity covered by the contract ceases.175 PACE expressed concerned one party to the contract might cease the telemarketing activity without informing the other party and it would be difficult to identify when the retention period is triggered.176 The Commission recognizes the potential for uncertainty in the scenario PACE raises and will modify the recordkeeping requirements accordingly to require retention of any records under this provision for five years from the date the contract expires.177 With respect to PACE’s request to limit the recordkeeping requirements to those service providers with whom sellers or telemarketers have a direct contractual relationship, the Commission is not persuaded that requiring records of service providers with which they have a business relationship would cause 173 PACE 33–15 at 3. 174 Id. 175 Id. 176 Id. 170 EPIC 34–23 at 7–8; NAAG 34–20 at 7–8; PACE 33–15 at 3; WPF 34–21 at 2. 171 WPF 34–21 at 2; see also Section III.A.2 (Call Detail Records). 172 EPIC 34–23 at 8. PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 177 If, after the end of a fixed term contract, a service provider continues to provide services and the telemarketer or seller continues to pay for those services, the Commission will consider the contract extended until performance ceases. E:\FR\FM\16APR1.SGM 16APR1 26772 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations additional burden. As explained in more detail in Section III.A.14— Compliance Obligation, the Commission will allow sellers and telemarketers to allocate recordkeeping responsibilities between themselves. In the scenario that PACE raises, a seller can simply require their telemarketer to retain records of all the service providers it uses to make outbound telemarketing calls on the seller’s behalf. khammond on DSKJM1Z7X2PROD with RULES 8. Sections 310.5(a)(10)—Entity-Specific DNC List The 2022 NPRM also proposed requiring telemarketers and sellers to maintain for five years records related to the entity-specific DNC list and its corresponding safe harbor provision under Section 310.4(b)(3)(iii).178 Specifically, the Commission proposed requiring telemarketers and sellers to retain records of: (1) the consumer’s name, (2) the phone number(s) associated with the DNC request, (3) the seller or charitable organization from which the consumer does not wish to receive calls, (4) the telemarketer that made the call; (5) the date the DNC request was made; and (6) the good or service being offered for sale or the charitable purpose for which contributions are being solicited. The Commission received four comments on this proposal. NAAG, PACE, and WPF, generally support the provision, noting that businesses likely retain this information in the ordinary course of business, while ECAC raised concerns.179 ECAC agrees that businesses likely keep most of the data listed in the proposed provision, but stated the requirements should not include retention of consumer phone numbers or records of the purpose of the call (e.g., the good or service offered for sale or the charitable purpose of contributions solicited) because both are burdensome to retain and irrelevant to the entity-specific TSR provisions.180 Instead, ECAC argues the Commission should modify the entity-specific DNC requirements so it prohibits calls to specific numbers rather than specific people, similar to how the DNC Registry is applied.181 PACE also requested the Commission clarify that the new entityspecific DNC recordkeeping provision requires retention of the telemarketing entity that made the call rather than the individual telemarketer.182 178 2022 NPRM, 87 FR at 33686. 34–22 at 4; NAAG 34–20 at 8; PACE 33– 15 at 3–4; WPF 34–21 at 3. 180 ECAC 34–22 at 4. 181 Id. 182 PACE 33–15 at 4. 179 ECAC VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 The Commission clarifies that the new recordkeeping provision requires retention of the identity of the telemarketing company that made the call and not the individual telemarketer. This requirement is particularly important for sellers or charitable organizations who engage multiple telemarketing entities to sell their good or service or seek a charitable contribution through telemarketing. Sellers or charities already should know which telemarketing entity logged the consumer’s request to cease receiving calls on their behalf and ensure all their telemarketers abide by that request. Similarly, when a telemarketer engages in telemarketing on behalf of multiple sellers or charitable organizations, it is important to require the retention of records of the purpose of the call any time a consumer asks a telemarketer to add them to the entityspecific DNC list. Since the entityspecific DNC prohibition is seller or charitable organization specific, telemarketers already should retain this information in the ordinary course of business because telemarketers must keep track of which seller on whose behalf they cannot contact specific consumers. With respect to ECAC’s concerns that retaining consumer phone numbers is irrelevant and overly burdensome, the Commission notes the safe harbor provision for the entity-specific DNC list is phone-number based and not based on a consumer’s name. Section 310.4(b)(3) states that a seller or telemarketer shall not be liable for violating the entity-specific DNC provisions if, among other things, they maintain and record a ‘‘list of telephone numbers the seller or charitable organization may not contact, in compliance with [the entity-specific DNC provision.]’’ 183 Telemarketers must already retain a consumer’s phone number in the ordinary course of business to comply with the TSR; including it in the new recordkeeping provision would not impose additional burden on businesses. 9. Section 310.5(a)(11)—DNC Registry The 2022 NPRM also proposed requiring telemarketers and sellers to maintain, for five years, records of every version of the FTC’s DNC Registry the telemarketer or seller downloaded in implementing the process referenced in the safe harbor provision of Section 310.4(b)(3)(iv).184 The Commission received four comments on this provision. NAAG, 183 16 CFR 310.4(b)(3)(iii). NPRM, 87 FR at 33686. 184 2022 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 PACE, and WPF generally support the proposed provision, but also request some clarifications or modifications, while ECAC generally objects to the requirement.185 WPF notes it ‘‘strongly support[s]’’ the proposed changes, noting they would ensure the ‘‘integrity of the Do Not Call Registry.’’ 186 ECAC argues the Commission should not require records of every version of the DNC Registry used because it ‘‘imposes significant costs and burdens’’ that ‘‘greatly exceed any marginal benefit’’ to the Commission, particularly when many of its members outsource scrubbing responsibilities to third parties and may never download the DNC Registry in the first place.187 WPF requests the Commission require telemarketers to keep records of how many times they accessed the DNC Registry or parts of the DNC Registry.188 PACE requests the Commission clarify how it believes sellers and telemarketers would comply with the proposal that they retain records of ‘‘every version of the registry they have downloaded.’’ 189 PACE states it would be ‘‘redundant’’ if the Commission is requiring businesses to ‘‘maintain separate versions of the registry apart from the up-to-date one’’ since most businesses only ‘‘scrub against the current version’’ of the registry in the ordinary course of business.190 PACE would support requiring them to ‘‘document the version of the registry they used’’ since doing so would reduce ‘‘redundancy and data storage costs associated with keeping expired registries.’’ 191 Given the objections raised, the Commission will modify this provision to clarify that sellers and telemarketers need not keep every version of the DNC Registry they accessed to comply with the TSR’s safe harbor rules. Instead, sellers and telemarketers must retain records of which version they used by keeping records of: (1) the name of the entity which accessed the registry; (2) the date the DNC Registry was accessed; (3) the subscription account number that was used to access the registry; and (4) the telemarketing campaign(s) for which it was accessed. Amending this provision to retain this information will address ECAC’s concerns that the seller or telemarketer may use a third-party service to access the DNC Registry, and PACE’s concern that retaining the actual version of the DNC Registry would be 185 ECAC 34–22 at 4; NAAG 34–20 at 8; PACE 33– 15 at 3–4; WPF 34–21 at 3. 186 WPF 34–21 at 3. 187 ECAC 34–22 at 4. 188 WPF 34–21 at 3. 189 PACE 33–15 at 4. 190 Id. 191 Id. E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations redundant and burdensome. It would also address WPF’s request that sellers and telemarketers should keep records of the number of times they access the DNC Registry. Presumably, sellers and telemarketers only access the DNC Registry to ensure compliance with the TSR’s DNC prohibitions since accessing the DNC Registry for any other purpose would be a violation of the TSR.192 10. Time Period To Keep Records The Commission proposed changing the time period that telemarketers and sellers must keep records from two years to five years from the date the record is made, except for Sections 310.5(a)(1) and (a)(9),193 where the Commission proposed requiring retention for five years from the date that records covered by those sections are no longer in use. The Commission received nine comments on this proposal.194 EPIC, NAAG, and WPF support the proposal, citing as rationales for their support the amount of time necessary to complete an investigation of TSR violations and that telemarketers fail to comply with litigation holds that are issued while investigations are pending.195 ECAC, NFIB, OCUL, PACE, Sirius, and the US Chamber of Commerce (‘‘Chamber’’) all object, raising burden concerns.196 PACE stated the Commission cannot assume its proposal would not be unduly burdensome based on the fact that data storage costs have decreased since 2014.197 This is particularly true for small businesses, according to PACE, when the Commission is simultaneously expanding the number of records that must be retained and the length of time those records must be retained.198 Sirius and OCUL also argue the FTC should not require retention of records ‘‘beyond the agency’s statute of limitations.’’ 199 Sirius argues the appropriate statute of limitations is three years,200 and OCUL argues that while the TSR does not ‘‘specify a statute of limitations,’’ courts will ‘‘apply the statute of limitations of 192 16 CFR 310.4(b)(2). records covered by these two sections include advertising materials and a list of the service providers who assisted in outbound telemarketing. See supra Sections III.A.1 (Substantially Different Advertising Materials) and III.A.7 (Other Service Providers). 194 2022 NPRM, 87 FR at 33686. 195 EPIC 34–23 at 4–5; NAAG 34–20 at 8–9; WPF 34–21 at 3. 196 ECAC 34–22 at 6; NFIB 33–4 at 5; OCUL 34– 19 at 2–3; PACE 33–15 at 4; Sirius 34–18 at 3; Chamber 34–24 at 1. 197 PACE 33–15 at 4. 198 Id. 199 Sirius 34–18 at 3. 200 Id. khammond on DSKJM1Z7X2PROD with RULES 193 The VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 the state where the case is filed,’’ which is two years in Ohio.201 The Commission is not persuaded by the general burden concerns commenters have raised. None of the commenters provided any information on what the burden would be and why small businesses would not be able to comply with the new recordkeeping amendments. As mentioned in Section III.A.2—Call Detail Records, the Commission provided an estimate of the additional cost of complying with the new recordkeeping amendments but did not receive any comment or data on why its estimate is inaccurate. Additionally, the Commission notes the statute of limitations for the FTC to seek civil penalties under the TSR is five years and not two or three years, as some commenters argued. Although the statute of limitations to seek consumer redress for TSR violations is three years under Section 19 of the FTC Act,202 the applicable statute of limitations for civil penalties is five years under Section 5 of the FTC Act.203 As such, the Commission believes it is appropriate and necessary to require the retention of records for five years. This requirement is particularly important when, as EPIC has noted, not all companies will comply with a litigation hold request while an investigation is pending, potentially leaving law enforcement agencies with no recourse in enforcing the TSR.204 11. Section 310.5(b)—Format of Records The 2022 NPRM proposed modifying the formatting requirements to require records that include phone numbers comport with the International Telecommunications Union’s Recommendation E.164 format for international phone numbers and North American Numbering plan for domestic phone numbers.205 For records that include time and call duration, the 2022 NPRM proposed industry keep these records to the closest whole second, and record times in Coordinated Universal Time (UTC). The Commission received 201 OCUL 34–19 at 2–3. U.S.C. 57b(d). 203 15 U.S.C. 45(m); 28 U.S.C. 2462; see also United States v. MyLife.com, Inc., 567 F. Supp. 3d 1152, 1166 (C.D. Cal. Oct. 19, 2021) (holding the statute of limitations for civil penalties under the FTC Act is five years); United States v. Dish Network, LLC, 75 F. Supp. 3d 942, 1004–05 (C.D. Ill. 2014) (holding the three-year statute of limitations in 15 U.S.C. 57b does not apply to claims for civil penalties under Section 5(m) of the FTC Act, and since Section 5(m) is silent, the applicable statute of limitations is five years under 28 U.S.C. 2462). The statute of limitations for a private right of action under the Telemarketing Act is three years. 15 U.S.C. 6104(a). 204 EPIC 34–23 at 4–5. 205 2022 NPRM, 87 FR at 33687. 202 15 PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 26773 two comments on this proposal. Both commenters support the amendments, but also requested clarifications or modifications. PACE asked the Commission to clarify that the new amendments requiring that time be kept in UTC format applies only to new records moving forward.206 It also requested the Commission allow businesses a reasonable time to implement the proposed changes since it may require reprogramming software and IT systems.207 The Commission clarifies that the new formatting requirements apply only to new records created after the proposed amendments go into effect. Additionally, as stated in Section III.A.2—Call Detail Records, the Commission will allow sellers and telemarketers a one hundred eighty-day grace period to implement any new systems, software, or procedures necessary to comply with that new provision. The Commission believes that should provide companies sufficient time to reprogram any software systems necessary to also comport with the new formatting requirements. EPIC requests the Commission require companies to maintain records in a format that is easily retrievable and inexpensive to produce and make clear the regulated party is responsible for the cost of producing the records.208 EPIC also requests the Commission impose more specific formatting requirements and require telemarketers and sellers to keep their records in a format that ‘‘is commonly used to work with large data sets’’ and ‘‘easily readable’’ such as ‘‘separate columns for separate data points rather than every data point within the same single data field.’’ 209 The Commission considered EPIC’s suggestions and declines to impose more specific formatting requirements. Technology is advancing at such a rapid pace that the Commission is concerned more specific formatting requirements might become obsolete in the future. Moreover, in the Commission’s experience, companies that use technologies such as an autodialer to make telemarketing calls rather than manual means typically retain records of those calls in an easily retrievable format. The Commission believes allowing companies to retain records as they would in the ordinary course of business strikes an appropriate balance between law enforcement’s interest in obtaining the information necessary to enforce the TSR and industry’s concerns 206 PACE 33–15 at 5. 207 Id. 208 EPIC 34–23 at 13. 209 Id. E:\FR\FM\16APR1.SGM 16APR1 26774 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations about burden. Finally, the Commission does not believe it is appropriate to require sellers and telemarketers to affirmatively bear the cost of producing records to private litigants regardless of the outcome of their suits as EPIC requests,210 when Congress already included a provision in the Telemarketing Act that allows a court to award the cost of the suit and any reasonable attorney or expert witness fees to the prevailing party.211 12. Section 310.5(c)—Violation of Recordkeeping Provisions The 2022 NPRM proposed clarifying that the failure to keep each record required by Section 310.5 in a complete and accurate manner constitutes a violation of the TSR.212 The Commission received five comments on this proposal. EPIC and NAAG support the proposal, stating it is a ‘‘commonsense approach in deterring deceptive telemarketers/sellers from harming consumers’’ 213 and ‘‘inaccurate or incomplete records are of little use.’’ 214 PACE also supports the proposed clarification, stating the proposal is ‘‘logical and in line with the spirit of the TSR and its accompanying legislation.’’ 215 But PACE raised concerns about the requirement that records be kept in an accurate and complete manner, arguing that companies who fail to keep all or some records in a complete and accurate manner through inadvertent error should not be penalized in the same way as telemarketers and sellers who fail to keep all or some categories of records.216 Instead, PACE urges leniency for situations where the failure is inadvertent rather than willful and requests the Commission provide ‘‘a 30day cure period when the alleged violation can be easily corrected.’’ 217 NFIB and Sirius object to this proposal.218 Sirius proposes the Commission ‘‘count violations by each type of record rather than by each record, as proposed.’’ 219 NFIB argues allowing civil penalties for ‘‘each erroneous error’’ is as ‘‘perverse as the evil the FTC states it is addressing, for it would allow the FTC to put a seller 210 Id. 211 15 U.S.C. 6104(d). NPRM, 87 FR 33687. 213 NAAG 34–20 at 10. 214 EPIC 34–23 at 5. 215 PACE 33–15 at 6. 216 Id. 217 Id. PACE also cites to the example NFIB provided in its comment as an example of why PACE believes the Commission should provide some leniency and an opportunity to cure rather than penalize inadvertent errors. 218 NFIB 33–4 at 6–7; Sirius 34–18 at 8. 219 Sirius 34–18 at 8. or telemarketer out of business for a relatively minor mistake that affected many records.’’ 220 NFIB provides an example to illustrate its concerns describing a situation where a company ‘‘made the relatively minor mistake of keeping calls in the time zone of the person called, rather than in Coordinated Universal Time (UTC) format.’’ 221 NFIB believes in this situation the company would be facing astronomically high fines for the hundreds of thousands of calls it makes a year.222 Instead, NFIB argues the FTC should provide a reasonable time period to cure these errors once discovered, such as 90 days, and only commence imposing fines for each week after the reasonable period expires.223 According to NFIB, this would be a more balanced system that ‘‘avoids both the extreme that a relatively minor design violation yields an astronomical fine that puts the seller or marketer out of business and the opposite extreme that a violation results in such a small fine that a seller or marketer accepts fines as an annoying but manageable cost of doing business.’’ 224 The Commission recognizes NFIB’s and PACE’s concerns regarding inadvertent errors resulting in large penalties and, thus, included a safe harbor provision for call detail records in the proposed amendments. As discussed in Section III.A.13—Safe Harbor for Incomplete or Inaccurate Records Pursuant to Section 310.5(a)(2) below, the Commission believes it has provided a reasonable grace period for sellers and telemarketers to cure any inadvertent deficiencies in their recordkeeping system before any civil penalties might apply and the proposed example NFIB raises would fall squarely within the safe harbor, provided the company followed the other requirements of the safe harbor. Regarding Sirius’s suggestion that failure to retain each type of record equal one violation, the Commission is not persuaded imposing civil penalties for each type of record would provide sufficient incentive for companies to abide by the recordkeeping provisions given the limited number of categories of records sellers and telemarketers are required to retain.225 khammond on DSKJM1Z7X2PROD with RULES 212 2022 VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 220 NFIB 33–4 at 7. 221 Id. 13. Section 310.5(d)—Safe Harbor for Incomplete or Inaccurate Records Kept Pursuant to Section 310.5(a)(2) The Commission proposed including a safe harbor provision for temporary and inadvertent errors in keeping call detail records pursuant to Section 310.5(a)(2). Specifically, the 2022 NPRM stated a seller or telemarketer would not be liable for failing to keep records under Section 310.5(a)(2) if it can demonstrate that: (1) it established and implemented procedures to ensure completeness and accuracy of its records under Section 310.5(a)(2); (2) it trained its personnel in the procedures; (3) it monitors compliance and enforces the procedures, and documents its monitoring and enforcement activities; and (4) any failure to keep accurate or complete records under Section 310.5(a)(2) was temporary and inadvertent.226 The Commission received four comments on this proposal. PACE states a ‘‘safe harbor for maintaining call detail records is necessary’’ while Sirius states it would ‘‘provide a good foundation for seller and telemarketer compliance plans.’’ 227 WPF states it does not ‘‘object to the safe harbor proposed’’ because it was ‘‘narrow enough to allow companies to make the kinds of mistakes that occur in day to day business, and provides incentives to correct the errors.’’ 228 NFIB, however, states it does not deem the safe harbor sufficient because it is ‘‘complex and limited’’ and does not provide a ‘‘great source of comfort to sellers and marketers in its current form.’’ 229 Because the safe harbor would apply in the scenario NFIB posits above where a company fails to keep call times in UTC format, the Commission believes the safe harbor provides adequate protection against inadvertent and temporary errors. The Commission, however, will revise this provision to provide sellers or telemarketers thirty days to cure an inadvertent error, as PACE suggests.230 14. Section 310.5(e)—Compliance Obligations The Commission proposed modifying the compliance obligations in Section 310.5(e) to state that, in the event the seller and telemarketer failed to allocate responsibility between themselves for 222 Id. 226 2022 223 Id. 225 Although Sirius did not provide a definition for what it meant by ‘‘type of record,’’ the Commission interprets it to mean the categories the Commission has outlined under the amended Section 310.5(a), which would limit the number of categories to eleven. PO 00000 Frm 00020 NPRM, 87 FR at 33687. 33–15 at 6; Sirius 34–18 at 8. 228 WPF 34–21 at 4. 229 NFBI 33–4 at 8. 230 PACE 33–15 at 6; see also Section III.A.12 (Violation of Recordkeeping Provisions which provides additional discussion about the proposed safe harbor). 227 PACE 224 Id. Fmt 4700 Sfmt 4700 E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES maintaining the required records, the responsibility for complying with the recordkeeping requirements would fall on both parties.231 The Commission received four comments on this proposal. NAAG, PACE, and Sirius supported the proposal.232 PACE states that ‘‘not only do we consider this fair, but we believe it will encourage parties to negotiate their contracts and cease regarding TSR recordkeeping as an afterthought.’’ 233 EPIC, however, objects to this amendment and strongly urges the Commission to require both telemarketers and sellers to retain records rather than allowing them to allocate responsibilities.234 Specifically, EPIC raises a concern that a seller may allocate responsibilities to a telemarketer that resides outside the United States and would not be subject to U.S. jurisdiction and process.235 EPIC argues that if the Commission is inclined to designate only one party, it should be the seller who is responsible because the seller should be accountable for the telemarketers it hires, is less likely to be overseas and undercapitalized compared to telemarketers, and likely receives most of the sales proceeds.236 But EPIC still believes the Commission should explicitly require both sellers and telemarketers be responsible for recordkeeping to prevent any gamesmanship where sellers move overseas to avoid liability.237 In the event the Commission is not persuaded, EPIC also argues the Commission should require sellers to audit their telemarketers, including reviewing an actual production of preserved records, and require sellers who hire overseas telemarketers to require those telemarketers to have a U.S.-based agent so their records would be subject to U.S. jurisdiction and process.238 The Commission shares EPIC’s concerns regarding gamesmanship and the challenges of obtaining records from overseas entities. The Commission is also concerned about sellers hiring unscrupulous telemarketers and disclaiming any responsibility for recordkeeping by allocating the responsibility to those telemarketers. The Commission notes that under the proposed amendment, sellers who allocate recordkeeping responsibilities 231 2022 NPRM, 87 FR at 33687. 34–20 at 10; PACE 33–15 at 6; Sirius 34–18 at 8. 233 PACE 33–15 at 6. 234 EPIC 34–23 at 8–10. 235 Id at 10. 236 Id. 237 Id. 238 Id. 232 NAAG VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 to their telemarketers would be required to ‘‘establish and implement practices and procedure to ensure the telemarketer is complying with the [TSR’s recordkeeping provisions].’’ 239 But given the concerns EPIC has raised, the Commission will modify this provision to also require sellers who allocate recordkeeping responsibilities to their telemarketer to retain access rights to those records so the seller can produce responsive records in the event it has hired a telemarketer overseas. Requiring sellers to ensure their telemarketers are abiding by the TSR’s recordkeeping provisions and retain access to their telemarketer’s records of telemarketing activities on the seller’s behalf should not impose onerous obligations, and such access may never be necessary. Sellers likely already take such steps in the ordinary course of business, given that telemarketers are acting as their agents and their telemarketers’ violations of the TSR could also expose them to liability under the TSR. 15. Authority To Require Recordkeeping NFIB argues the new recordkeeping proposals exceed the FTC’s statutory authority under the Telemarketing Act.240 Section 6102(a) of the Telemarketing Act directs the Commission to: (1) prescribe rules prohibiting deceptive or abusive telemarketing acts or practices; 241 (2) include in those rules a definition of deceptive acts or abusive practices that shall include fraudulent charitable solicitations and may include actions that constitute assisting or facilitating such as credit card laundering; 242 and (3) include in those rules a specific list of abusive practices that govern patterns and timing of unsolicited calls, and disclosures of certain material information in sales or charity calls.243 It also states at the end of Section 6102(a) that ‘‘[i]n prescribing the rules described in this paragraph, the Commission shall also consider recordkeeping requirements.’’ NFIB argues the directive to consider recordkeeping requirements applies only to the specific list of abusive practices under Section 6102(a)(3) and, since the other paragraphs are silent as to recordkeeping, the Act affirmatively prohibits the FTC from requiring recordkeeping.244 The Commission does not agree. The language of the Act 239 2022 NPRM, 87 FR at 33694. 33–4 at 5–6. 241 15 U.S.C. 6102(a)(1). 242 Id. 6102(a)(2). 243 Id. 6102(a)(3). 244 NFIB 33–4 at 6. 240 NFIB PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 26775 shows the directive to consider recordkeeping applies to the Act’s mandate to promulgate rules addressing deceptive or abusive telemarketing practices and is not limited to the specific abusive practices identified in Section 6102(a)(3). Section 6102(a) generally requires the Commission to promulgate rules regarding deceptive or abusive telemarketing acts or practices. Section 6102(a)(1) states: ‘‘[t]he Commission shall prescribe rules prohibiting deceptive telemarketing acts or practices and other abusive telemarketing acts or practices.’’ 245 Sections 6102(a)(2) and (a)(3) then identify specific provisions that Congress instructs the Commission to include, or consider including, when it promulgates its rules under Section 6102(a)(1). Section 6102(a)(2) directs the Commission to ‘‘include in such rules respecting deceptive telemarketing acts or practices’’ a definition of deceptive telemarketing acts or practices, which may include, among other things, credit card laundering.246 Section 6102(a)(3) directs the Commission to ‘‘include in such rules respecting other abusive telemarketing acts or practices’’ specific requirements including: (1) ‘‘a requirement that telemarketers may not undertake a pattern of unsolicited telephone calls which the reasonable consumer would consider coercive or abusive of such consumer’s right to privacy’’; (2) ‘‘restrictions on the hours of the day and night when unsolicited telephone calls can be made to consumers’’; (3) ‘‘a requirement that any person engaged in telemarketing for the sale of goods or services’’ make certain disclosures; and (4) ‘‘a requirement that any person engaged in telemarketing for the solicitation of charitable contributions’’ make certain disclosures.247 At the end of Section 6102(a)(3), in a separate unnumbered sentence, the Act states ‘‘[i]n prescribing the rules described in this paragraph, the Commission shall also consider recordkeeping requirements.’’ 248 Thus, Congress directed the Commission to promulgate rules prohibiting deceptive or abusive telemarketing acts or practices under Section 6102(a)(1), and Sections 6102(a)(2) and (a)(3) merely inform what types of acts or practices the Commission should include, or consider including, when it promulgates those rules.249 245 15 U.S.C. 6102(a)(1) (emphasis added). 6102(a)(2) (emphasis added). 247 Id. 6102(a)(3) (emphasis added). 248 Id. 249 The Commission also notes that the official codification of the Telemarketing Act in the United States Code aligns the indentation of the statement 246 Id. Continued E:\FR\FM\16APR1.SGM 16APR1 26776 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES NFIB’s interpretation of Section 6102(a)(3) improperly divorces that provision from the rest of the statute. As discussed, Section 6102(a)(3) contains Congress’s specific guidance regarding the types of rules the Commission must adopt or consider adopting to implement Section 6102(a)(1)’s general grant of authority to ban deceptive or abusive telemarketing practices. Section 6102(a)(3) states when the Commission ‘‘prescrib[es] the rules described’’ by Congress, it ‘‘shall also consider recordkeeping requirements.’’ This provision thus authorizes the Commission to adopt—or not adopt— recordkeeping requirements and declare violations of such requirements to be an abusive telemarketing practice. But even if Section 6102(a)(3) did not expressly authorize the Commission to consider recordkeeping requirements, the Commission may still require recordkeeping under Section 6102(a)(1). Congress’s purpose in enacting the Telemarketing Act was to prevent deceptive or abusive telemarketing acts or practices.250 As the Commission has noted over the years, recordkeeping provisions prevent deceptive or abusive telemarketing acts or practices because they are necessary to effectively enforce the TSR.251 NFIB’s assertion that ‘‘the rules for recordkeeping do not prevent or address deceptive or other abusive telemarketing acts or practices’’ is not an accurate assertion 252 and it is undermined by the Commission’s law enforcement experience and that of other enforcers.253 Even if Section 6102(a)(1) could be read as being silent on recordkeeping, that would not prohibit the Commission from including recordkeeping in any rules the Commission promulgates under this section of the Act. Rather, Congress directed the Commission to prescribe rules prohibiting deceptive telemarketing acts or practices and the Commission is granted authority to ‘‘In prescribing the rules described in this paragraph, the Commission shall consider recordkeeping requirements’’ with Section 6102(a) rather than with Section 6102(a)(3). As such, it supports the Commission’s position that the directive to consider recordkeeping refers generally to Section 6102(a) and is not limited to the specific acts and practices listed in Section 6102(a)(3). See, e.g., https://www.govinfo.gov/content/pkg/ USCODE-2011-title15/pdf/USCODE-2011-title15chap87.pdf (last visited November 21, 2023). 250 H.R. Rep. No. 103–20, 103rd Cong., 1st Sess. (‘‘House Report’’) at 1; S. Rep. No. 103–80, 103rd Cong., 1st Sess. (‘‘Senate Report’’) at 1 (stating the purpose of the bill was ‘‘to prevent fraudulent or harassing telemarketing practices’’). 251 Original TSR 60 FR at 43857; 2003 TSR Amendments, 68 FR at 4653; 2014 TSR Rule Review, 79 FR at 46735. 252 NFIB 33–4 at 5–6. 253 See, e.g., NAAG 34–20 at 3–10. VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 issue rules, including recordkeeping provisions, for any deceptive or abusive telemarketing acts or practices it identifies in promulgating the TSR.254 Congress’s silence would make sense given the Commission had yet to identify these deceptive or abusive acts or practices in the TSR at the time the Telemarketing Act was passed, and it was unknown whether and what form of recordkeeping would be necessary to ensure compliance.255 Interpreting the Telemarketing Act to prohibit the Commission from requiring recordkeeping would contradict the Act’s stated purpose—to ‘‘enact legislation that will offer consumers necessary protection from telemarketing deception and abuse.’’ 256 Nothing in the text of the Act prevents the Commission from requiring persons to keep records substantiating their compliance with any requirement of the TSR. Nor does NFIB explain why Congress would have intended to deprive the Commission of records essential to the enforcement of the rule. NFIB’s interpretation would give telemarketers and sellers a perverse incentive to commit deceptive and abusive practices while destroying any record of those violations. Finally, even if a court determines the Act only permits recordkeeping for rules that address the specific acts and 254 See. e.g., U.S. Sugar Corp. v. EPA, 830 F.3d 579, 617–18 (D.C. Cir. 2016) (upholding EPA’s authority to require recordkeeping in regulating even though Congress was silent on that issue because ‘‘Congress plainly intended EPA to regulate sources burning ‘any’ solid waste, a goal presumably advanced by the recordkeeping presumption’’). 255 Congress has amended the Telemarketing Act numerous times over the years but made no changes to the recordkeeping provision. See, e.g., supra note 13. Given that the TSR has always included recordkeeping requirements since its inception in 1995 and the FTC has reported to Congress on its rulemaking efforts at various congressional hearings, Congress’s silence on this issue can be interpreted as agreement with the FTC’s statutory construction. See, e.g., Washington All. of Tech. Workers v. U.S. Dep’t of Homeland Sec., 50 F.4th 164, 182 (D.C. Cir. 2022) (quoting Jackson v. Modly, 949 F.3d 763, 772–73 (D.C. Cir. 2020)). 256 15 U.S.C. 6101(5). The Commission’s position is also supported by the legislative history, which demonstrates that Congress intended for the Commission to consider recordkeeping requirements more broadly. See Senate Report at 7. The Senate Report references Section 3(a)(5) in an earlier version of the Act that directed the Commission to ‘‘prescribe rules regarding telemarketing activities’’ and in prescribing those rules to ‘‘consider the inclusion of . . . (5) recordkeeping requirements.’’ Telemarketing and Consumer Fraud and Abuse Prevention Act, S. 568, 103rd Cong. (1993). At minimum, this legislative history supports the position that the Commission may require recordkeeping for all abusive telemarketing acts or practices it identifies in promulgating the TSR and is not limited to those specific acts or practices listed in Section 6103(a)(3). PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 practices listed in Section 6102(a)(3), the TSR’s recordkeeping provisions meet those criteria. The Final Rule requires recordkeeping for eleven general categories of information: (1) advertisements, including telemarketing scripts and robocall recordings; (2) call detail records; (3) prize recipients; (4) customers; (5) customer information to establish a business relationship; (6) previous donors; (7) telemarketers’ employees; (8) consent; (9) service providers; (10) entity-specific DNC; and (11) versions of the FTC’s DNC. Each of these categories is necessary to ensure compliance with the provisions of the TSR the Commission promulgated to address the specifics acts or practices identified in Section 6102(a)(3). For example, Section 6102(a)(3)(A) of the Act requires the FTC to prohibit ‘‘a pattern of unsolicited telephone calls which the reasonable consumer would consider coercive or abusive of such consumer’s right to privacy.’’ 257 Accordingly, the Commission promulgated Section 310.4(b) of the TSR to prohibit certain ‘‘patterns of calls,’’ 258 including prohibitions against robocalls, calls to consumers who have asked a specific seller to stop calling, and calls to consumers who have registered their phone numbers on the FTC’s DNC Registry.259 As explained in more detail in Section II—Overview of the Proposed Amendments to the TSR above, the Commission needs all eleven categories of information set forth in the Final Rule, including the requirement that sellers and telemarketers retain call detail records to ensure compliance with these prohibitions.260 Similarly, Section 6102(a)(3)(B) of the Act requires the FTC to place restrictions on when telemarketers can make unsolicited calls, while Sections 6102(a)(3)(C) and (D) require the FTC to mandate certain disclosures. The FTC promulgated Section 310.4(c) of the TSR 257 15 U.S.C. 6102(a)(3)(A). CFR 310.4(b). 259 16 CFR 310.4(b)(1)(iii) and (b)(1)(v). See also Original TSR, 60 FR at 43854 (stating the entityspecific DNC provisions are intended to effectuate the requirements of Section 6102(a)(3)(A) of the Telemarketing Act); 2002 NPRM, 67 FR at 4518 (proposing the DNC Registry to ‘‘fulfill the mandate in the Telemarketing Act that the Commission should prohibit telemarketers from undertaking ‘a pattern of unsolicited telephone calls which the reasonable consumer would consider coercive or abusive of such consumer’s right to privacy’’’) (quoting 15 U.S.C. 6102(a)(3)(A)); 2006 Denial of Petition for Proposed Rulemaking, Revised Proposed Rule With Request for Public Comments, Revocation of Non-enforcement Policy, Proposed Rule (‘‘2006 NPRM’’), 73 FR 58716, 58726 (proposing adding an express prohibition against [robocalls] pursuant to Section 6102(a)(3)(A) of the Telemarketing Act). 260 See supra Sections II.A (Recordkeeping) and II.C (New Definition for ‘‘Previous Donor’’). 258 16 E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations to prohibit calls to a person’s residence outside of certain hours and Sections 310.4(d) and (e) to require telemarketers to disclose the identity of the seller or charity, the purpose of the call, the nature of the good or service being sold, and that no purchase is required to win a prize or participate in a prize promotion. The TSR’s existing and amended recordkeeping requirements are necessary to ensure compliance with these provisions of the TSR. For example, call detail records are needed to ensure telemarketers abide by the call time restrictions, while the requirements to retain records of advertisements, telemarketing scripts, robocalls, consent, customers, prize recipients, and call details regarding the content of the call are required to determine whether a telemarketer has made the necessary disclosures. B. Modification of the B2B Exemption The 2022 NPRM proposed narrowing the B2B exemption to require B2B telemarketing calls to comply with Section 310.3(a)(2)’s prohibition on misrepresentations and Section 310.3(a)(4)’s prohibition on false or misleading statements.261 The Commission received twelve comments on this proposal.262 Rapid Financial Services, LLC and Small Business Financial Solutions, LLC (collectively, ‘‘Rapid Finance’’), EPIC, NAAG, USTelecom—The Broadband Association (‘‘USTelecom’’), WPF, and three anonymous commenters all support the proposal.263 EPIC strongly supports the proposal, stating ‘‘there is no reason to believe that phone-based attempts to exploit small business victims have diminished since the pandemic began.’’ 264 NAAG states ‘‘misrepresentations and false or misleading statements, in any form, are harmful to trade and commerce in general.’’ 265 WPF argues ‘‘there is no downside to this particular update—the FTC Act already prohibits such activity.’’ 266 The anonymous commenters expressed concern over the harm that businesses suffer from deceptive telemarketing.267 USTelecom highlights small and medium-sized businesses (‘‘SMBs’’), in 261 2022 NPRM, 87 FR at 33687. Commission received an additional ten comments addressing whether the Commission should generally repeal the B2B exemption in its entirety. The Commission addresses those comments in the 2024 NPRM, issued this same day. 263 Anonymous 34–11, 33–11, and 33–13; EPIC 34–23 at 17; NAAG 34–20 at 10; Rapid Finance 34– 17 at 3; USTelecom 33–14 at 3–4; WPF 34–21 at 4. 264 EPIC 34–23 at 17. 265 NAAG 34–20 at 10. 266 WPF 34–21 at 4. 267 Anonymous 34–11, 33–11, and 33–13. khammond on DSKJM1Z7X2PROD with RULES 262 The VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 particular, ‘‘can be disproportionately impacted by malicious B2B telemarketers’’ and scammers primarily use phones as the primary means of contacting SMBs.268 USTelecom also argues bad actors hide behind the B2B exemption and other legal ambiguities to avoid accountability, citing to a particularly pernicious example of a high-volume B2B telemarketing robocall campaign purporting to sell services that help SMBs boost their companies’ Google listing that tied up the business’s phone lines.269 Rapid Finance states, as a general matter, it ‘‘does not oppose, and indeed supports the application of the TSR to B2B calls to prohibit material misrepresentations and false or misleading statements in B2B telemarketing transactions, including prohibiting the specific misrepresentations listed in Section 310.3(a)(2).’’ 270 Rapid Finance explains its business customers are ‘‘often the target of telemarketers seeking to peddle so-called debt settlement services to them.’’ 271 NFIB, Revenue Based Finance Coalition (‘‘RBFC’’), Third Party Payment Processors Association (‘‘TPPPA’’), and PACE all object to this proposed amendment.272 RBFC argues amending the TSR to apply to deceptive B2B telemarketing would ‘‘undermine the Supreme Court’s interpretation of the FTC’s authority to impose penalties,’’ 273 citing AMG Capital Management, LLC v. FTC.274 RBFC’s arguments are inapposite because the Supreme Court’s decision in AMG concerned the FTC’s authority to obtain consumer redress under Section 13(b) of the FTC Act; 275 the decision did not address or implicate the Commission’s authority to promulgate rules under the Telemarketing Act. PACE and NFIB argue applying the TSR to B2B telemarketing exceeds the scope of the FTC’s authority under the 268 USTelecom 33–14 at 3–4. 269 Id. 270 Rapid Finance 34–17 at 3. Rapid Finance also argues that the amendments will close the gap between how B2B sellers and B2B telemarketers are treated under the TSR. Id. at 6–7. Rapid Finance appears to be under the misimpression that the B2B exemption only applies to telemarketers and not to sellers. That is incorrect and the Commission clarifies that the exemption under Section 310.6(a)(7) applies to both sellers and telemarketers. The Commission also notes that Rapid Finance raised other issues that the Commission is not addressing because they are unrelated to the focus of this rulemaking. Id. at 6. 272 NFIB 33–4 at 8–12; RBFC 34–13 at 1–4; TPPPA 34–14 at 2; PACE 33–15 at 7–9. 273 RBFC 34–13 at 3. 274 AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341 (2021). 275 15 U.S.C. 53(b). 271 Id. PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 26777 Telemarketing Act.276 They claim the Telemarketing Act is limited to consumer harm because of its ‘‘consistent use of consumer-oriented language’’ and the focus on consumer harm in the statutory text and legislative history. 277 PACE also argues the Telemarketing Act’s directive for the Commission to identify deceptive telemarketing practices is also limited to consumer harm, because the Commission itself has historically conceptualized deception from a consumer perspective in its policy statements.278 The Commission disagrees. The Telemarketing Act directs the FTC to promulgate a rule that addresses deceptive and abusive telemarketing practices which, in the Commission’s law enforcement experience, includes B2B telemarketing. The language of the Act supports the Commission’s position. First, the Act defines ‘‘telemarketing,’’ as ‘‘a plan, program, or campaign which is conducted to induce purchases of goods or services . . ., by use of one or more telephones and which involves more than one interstate telephone call.’’ 279 The Act exempts from the definition of telemarketing ‘‘the solicitation of sales through the mailing of a catalog’’ which meet certain criteria and ‘‘where the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog during those calls. . . .’’ 280 The Act only specifies that ‘‘telemarketing’’ must involve the use of one interstate telephone call but does not identify who must participate in the call. To the extent it identifies any participant, it uses the term customers, which includes businesses.281 Second, Section 6102(a)(1) directs the Commission to ‘‘prescribe rules 276 NFIB 33–4 at 11; PACE 33–15 at 7–9. 33–15 at 8; see also NFIB 33–4 at 11 (arguing all five findings in the Telemarketing Act reference consumer harm and not harm to businesses). 278 PACE 33–15 at 7–9. NFIB raises separate objections to repealing the B2B exemption based on changing market forces described in the Commission’s 2022 ANPR. NFIB 33–4 at 9–10. As explained in the 2024 NPRM that the Commission is issuing concurrently with this Final Rule, the Commission declined to move forward with narrowing the B2B exemption as proposed in the 2022 ANPR. As such, the Commission will not address NFIB’s argument here since it is not applicable in requiring B2B telemarketing to comply with the TSR’s misrepresentation provisions. 279 15 U.S.C. 6106(4). 280 15 U.S.C. 6106(4) (emphasis added). 281 See, e.g., Customer, Merriam-Webster Dictionary, available at https://www.merriamwebster.com/dictionary/customer (last visited Feb. 1, 2024) (defining customer as ‘‘one that purchases a commodity or service’’). 277 PACE E:\FR\FM\16APR1.SGM 16APR1 26778 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations prohibiting deceptive telemarketing acts or practices and other abusive telemarketing acts or practices.’’ 282 Section 6102(a)(2) directs the Commission to include in its rules ‘‘a definition of deceptive telemarketing acts or practices which shall include fraudulent charitable solicitations, and which may include acts or practices of entities or individuals that assist or facilitate deceptive telemarketing, including credit card laundering.’’ 283 Congress used broad language, similar to the language of the FTC Act, in directing the FTC to promulgate a rule. The Act does not limit the scope of the rule promulgated under the Act to telemarketing that harms natural persons. Nor does the Act prohibit applying the rule to telemarketing that harms businesses or other organizations. Third, Sections 6102(a)(3)(C) and (D) direct the Commission to require ‘‘any person engaged in telemarketing’’ to ‘‘promptly and clearly disclose to the person receiving the call the purpose of the call is to’’ sell a good or service or solicit a charitable solicitation.284 Once again, Congress did not specify that the disclosure must be made to a natural person rather than a business. It simply specified that the disclosure be made to the person who received the call. Although PACE and NFIB argue the Commission’s authority is limited to addressing deceptive or abusive telemarketing practices that harm natural persons because of the Act’s liberal use of the term ‘‘consumer,’’ 285 none of the Act’s provisions described above uses the word ‘‘consumer.’’ Moreover, the Act never defines the term ‘‘consumer.’’ Given the Act’s broad language, the most logical reading of the term ‘‘consumer’’ is that it encompasses all—including businesses—who consume a product or service. The absence of a definition is notable when Congress has defined ‘‘consumer’’ in other contexts, such as when it enacted the Magnuson-Moss Warranty— Federal Trade Commission Improvement Act in 1975 (‘‘MagnusonMoss’’).286 Under Title I of Magnuson282 15 U.S.C. 6102(a)(1). U.S.C. 6102(a)(2). 284 15 U.S.C. 6102(a)(3)(C) and (D) (emphasis added). 285 NFIB 33–4 at 11; PACE 33–15 at 7–9. 286 Title I of that legislation created the Magnuson-Moss Warranty Act (‘‘Magnuson-Moss’’), Public Law 93–637 (1975) (codified as amended at 15 U.S.C. 2301), extending Commission jurisdiction over consumer product warranties. Title II, separately known as the Federal Trade Commission Improvement Act (‘‘FTCIA’’), modernized the FTC Act by expanding the Commission’s anti-fraud powers, including power to ‘‘redress consumer injury resulting from violations of the [FTC Act]’’ by filing civil actions in district court. S. Rep. No. khammond on DSKJM1Z7X2PROD with RULES 283 15 VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 Moss, which extended the Commission’s jurisdiction over consumer product warranties, Congress narrowly defined ‘‘consumer’’ to mean a buyer of any ‘‘consumer product’’ which is ‘‘normally used for personal, family, or household purposes.’’ 287 Congress also clarified that the narrow definition of consumer was limited to Title I of the Magnuson-Moss Act and did not apply to Title II, which among other things, codified the FTC’s ability to seek consumer redress by filing civil actions in Federal court.288 Under Title II, Congress stated the term ‘‘consumer’’ in the FTC Act should still be construed broadly without the limitations imposed in section 101(3) of title I of S. 356.289 Here, no such definition exists. If Congress had intended to limit the scope of the Telemarketing Act to those acts and practices directed at individuals rather than businesses, it would have done so. The Commission’s position is also supported by the legislative history. A Senate Report on the Act explained that, in directing the Commission to define ‘‘fraudulent telemarketing acts or practices’’ in its rulemaking, that Congress intended the rule ‘‘to encompass the types of unlawful activities that are currently being addressed by the both the FTC and the States in their telemarketing cases.’’ 290 The Report also stated Congress intends the ‘‘rule to be flexible enough to encompass the changing nature of [fraudulent telemarketing] activity while at the same time providing telemarketers with guidance as to the general nature of prohibited conduct.’’ 291 At the time the Telemarketing Act was passed, the Commission’s law enforcement experience included cases against deceptive B2B telemarketing.292 In promulgating the original TSR, the Commission considered exempting all B2B telemarketing but stated, given its ‘‘extensive enforcement experience pertaining to deceptive telemarketing directed to businesses,’’ it did not believe ‘‘an across-the-board exemption for business-to-business contacts is 93–151, at 3 (1973). Public Law 93–637; Public Law 93–153. p. 2533 (1975) (codified as amended at 15 U.S.C. 45 et seq.). 287 15 U.S.C. 2103(1) and (3). 288 See supra note 286. 289 S. Rep. No. 93–151, at 27. 290 Senate Report at 7. 291 Id. 292 See Prepared Statement of the Federal Trade Commission before the United States House of Representatives Committee on Small Business (Sept. 28, 1994) (detailing the Commission’s law enforcement actions against telemarketers who have harmed small businesses). PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 appropriate.’’ 293 Instead, the original TSR excluded from the B2B exemption telemarketing schemes that sell nondurable office or cleaning supplies because, in the Commission’s law enforcement experience, these B2B schemes ‘‘have been by far the most significant business-to-business problem area [that] such telemarketing falls within the Commission’s definition of deceptive telemarketing acts or practices.’’ 294 The Commission also stated it would reconsider the scope of the B2B exemption ‘‘if additional business-to-business telemarketing activities become problems after the Final Rule has been in effect.’’ 295 Each time the Commission has considered applying the TSR to other B2B telemarketing, it has done so based on its law enforcement experience in keeping with Congress’s directive.296 But even if the term ‘‘consumer’’ is construed more narrowly to exclude businesses, the Act’s language still supports the Commission’s position that the Act allows it to regulate B2B telemarketing. First, one of the Act’s findings states ‘‘[c]onsumers and others are estimated to lose $40 billion a year in telemarketing fraud.’’ 297 The legislative history makes clear Congress was concerned about telemarketing fraud against small businesses.298 Second, the Act uses broad language in the definition of telemarketing, in its directives to promulgate rules regarding deceptive or abusive telemarketing under Section 6102(a)(1), and in its directives of what to include in those rules under Sections 6102(a)(2), (a)(3)(C), and (a)(3)(D). These provisions do not contain any reference to a ‘‘consumer.’’ 299 If Congress intended to construe consumer narrowly, Congress’s omission of the term consumer from 293 Original TSR, 60 FR at 43861–62. 294 Id. 295 Id. at 43862. NPRM, 87 FR at 33682–83. Although the Commission’s law enforcement efforts have primarily focused on harms to small businesses, the Commission believes that the Telemarketing Act authorizes the Commission to apply the TSR to B2B telemarketing more broadly for the reasons stated here. Similar to the recordkeeping provision, the Commission notes that Congress has amended the Telemarketing Act numerous times but made no changes to prohibit the TSR’s application to some B2B telemarketing. Congress’s silence here can also be interpreted as agreement with the FTC’s statutory construction. See supra note 255. 297 15 U.S.C. 6101(3) (emphasis added). 298 The legislative history supports the Commission’s position that, even assuming a narrower definition of consumer, the Telemarketing Act allows the Commission to regulate B2B telemarketing. The Senate Report on the Act explains that telemarketing fraud ‘‘affects a cross section of Americans, including small business.’’ Senate Report at 2. 299 15 U.S.C. 6102(a) and 6106(4). 296 2022 E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations these provisions of the Act demonstrates Congress did not intend to limit the TSR to telemarketing that harms only individual consumers. Finally, RBFC and TPPPA make general objections that prohibiting misrepresentations in B2B telemarketing is unnecessary; that it would ‘‘unduly burden legitimate business activities’’; 300 and would not provide small businesses any additional protections when the FTC has authority already to pursue bad actors that harm businesses under the FTC Act.301 RBFC also argues if the Commission were to prohibit misrepresentations in B2B telemarketing, it should only do so in the areas where there is a history of deception such as the top five scams identified in the Better Business Bureau’s research report issued in 2018.302 The Commission is not persuaded by these arguments. The Commission notes that requiring B2B telemarketers to comply with the TSR’s prohibitions against misrepresentations would provide the Commission with additional tools to obtain monetary redress for those harmed by illegal telemarketing and civil penalties against bad actors who violate the law, creating a deterrent effect. Importantly, the proposed amendment refrains from imposing any burdens on B2B sellers and telemarketers, including recordkeeping requirements. And, as commenters have noted, because businesses must already comply with the FTC Act, which prohibits deceptive or unfair conduct, complying with the TSR should not create significant burden.303 The Commission also does not believe it should limit the prohibition against misrepresentations to just the five top scams identified in the BBB’s 2018 report. The Commission has monitored deceptive telemarketing impacting small businesses since 1995 and has observed not only the increase in deceptive telemarketing but how easily scammers shift tactics and peddle different products or services to small businesses.304 Given the Commission’s 300 TPPPA 34–14 at 2. 34–13 at 2–3. 302 RBFC 34–13 at 3; see also Better Business Bureau, Scams and Your Small Business Research Report, at 7–8 (2018), available at https:// www.bbb.org/content/dam/bbb-institute-(bbbi)/ files-to-save/bbb_smallbizscamsreport-final-0618.pdf (last visited Dec. 11, 2023). RBFC argues that any application of the TSR should be limited to the BBB’s top five scams impacting small businesses including: ‘‘(1) bank/credit card company imposters, (2) directory listing and advertising services; (3) fake invoice/supplier bills; (4) fake checks; and (5) tech support scams.’’ RBFC 34–13 at 3. 303 RBFC 34–13 at 2–3; WPF 34–21 at 4. 304 See Section II.B (B2B Telemarketing). khammond on DSKJM1Z7X2PROD with RULES 301 RBFC VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 extensive law enforcement experience in B2B telemarketing cases—including schemes involving deceptive business directory listings, web hosting or design, search engine optimization services, and government impersonators 305—the Commission believes applying the TSR’s prohibitions against misrepresentations in Section 310.3(a)(2) and 310.3(a)(4) is appropriate. C. New Definition of ‘‘Previous Donor’’ The 2022 NPRM proposed adding a new definition for the term ‘‘previous donor’’ to identify consumers who have donated to a particular charity within the two-year period immediately preceding the date the consumer receives a robocall on behalf of that charity.306 The Commission proposed including this new definition to make clear that telemarketers are allowed to place charity robocalls only to consumers who have previously donated to that charity within the last two years.307 The Commission received three comments on the new definition. WPF supports the new definition, stating it would ‘‘clarify the exemption for charitable donations’’ and ‘‘effectively close what has been a fairly significant loophole.’’ 308 EPIC also supports the new definition and the clarification that the robocall exemption only applies to consumers who have previously donated to the soliciting charity, but it also urges the Commission to emphasize the limited scope of this exemption from the general prohibition against robocalls.309 One anonymous commenter objected to this new definition, arguing there should not be an exemption to place robocalls to prior donors in the first place.310 The Commission emphasizes the exemption to allow a telemarketer to place charity robocalls is narrow in scope and amending the TSR to add a new definition of ‘‘previous donor’’ will ensure the exemption remains narrow. The Commission understands some consumers do not want to receive any robocalls, including from charities they have supported through a donation. In such cases, the Commission notes that a consumer who does not want to receive such robocalls may request to be added to that charity’s do-not-call list. If the consumer has done so, the 305 Id. NPRM, 87 FR at 33687–88. qualify for this narrow exemption, telemarketers must also comply with the provisions of Section 310.4(b)(1)(v)(B). 308 WPF 34–21 at 1. 309 EPIC 34–23 at 16. 310 Anonymous 34–7. 26779 exemption to place robocalls does not apply and it is a violation of the TSR for a telemarketer to place robocalls to the consumer on behalf of that charity.311 D. Corrections to the Rule In the 2022 NPRM, the Commission proposed the following five corrections to the Rule: • In all instances where Sections 310.6(b)(1), (b)(2), and (b)(3) crossreference Sections 310.4(a)(1), (a)(7), (b), and (c), change these citations so that they cross-reference Sections 310.4(a)(1), (a)(8), (b), and (c). • Modifying the time requirements in the definition of EBR from months to days as follows: Æ Changing the time requirement to qualify for EBR in Section 310.2(q)(1) from 18 months between the date of the telephone call and financial transaction to 540 days. Æ Changing the time requirement to qualify for EBR in Section 310.2(q)(2) from three months between the date of the telephone call and the date of the consumer’s inquiry or application to 90 days. • Adding an email address to Section 310.7 for State officials or private litigants to provide notice to the Commission that they intend to bring an action under the Telemarketing Act. • Amending Section 310.5(a)(7) so it is consistent in form with the new proposed additions to Section 310.5(a). • Amending Section 310.5(f) to remove an extraneous word.312 The Commission did not receive any comments on the proposed modifications and will implement the amendments as proposed. The Commission will also make the following additional non-substantive modifications to the Rule: • Change all references in the TSR from ‘‘this Rule’’ to ‘‘this part.’’ • Renumber the footnotes in the TSR so the first footnote starts at one. Finally, as described in Section III.B— Modification of the B2B Exemption, some commenters did not understand the term ‘‘consumer’’ includes businesses. To address any confusion, the Commission will change references to ‘‘consumer’’ in the amendments of the recordkeeping requirements and definition of EBR to the defined term ‘‘person.’’ 313 The Commission will also modify the references to ‘‘consumer’’ and ‘‘business’’ in the new recordkeeping requirement to retain call 306 2022 307 To PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 311 See Section 310.4(b)(1)(v)(B)(iii) (requiring sellers and telemarketers to comply with all other requirements of this part, which include the entityspecific do not call provisions). 312 2022 NPRM, 87 FR at 33688. 313 310 CFR 310.2(y). E:\FR\FM\16APR1.SGM 16APR1 26780 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations detail records in Section 310.5(a)(2)(iv) to ‘‘individual consumer’’ and ‘‘business consumer.’’ While these modifications do not substantively alter the scope or application of the TSR, the Commission believes they will resolve any remaining uncertainty. IV. Paperwork Reduction Act The current Rule contains various provisions that constitute information collection requirements as defined by 5 CFR 1320.3(c), the definitional provision within the Office of Management and Budget (‘‘OMB’’) regulations implementing the Paperwork Reduction Act (PRA). 44 U.S.C. chapter 35. OMB has approved the Rule’s existing information collection requirements through October 31, 2025.314 The 2022 NPRM’s proposed amendments made changes in the Rule’s recordkeeping requirements that increased the PRA burden as detailed below.315 Accordingly, FTC staff submitted the 2022 NPRM and the associated Supporting Statement to OMB for review under the PRA.316 On June 16, 2022, OMB directed the FTC to resubmit its request when the proposed rule is finalized.317 None of the public comments submitted addressed the estimated PRA burden included in the 2022 NPRM, but some commenters did raise general burden concerns.318 Other commenters concurred that sellers and telemarketers likely retained the required records in the ordinary course of business and that the cost of electronic storage is decreasing.319 The Commission’s responses to those concerns are set forth in more detail in Section III—Final Amended Rule, and in some instances the Commission made modifications to the proposed rule to address the concerns and reduce the estimated PRA burden. The Final Rule contains new recordkeeping requirements and modifications to existing recordkeeping requirements. The new recordkeeping provisions require sellers or telemarketers to retain: (1) a copy of khammond on DSKJM1Z7X2PROD with RULES 314 OMB Control No: 3084–0097, ICR Reference No: 202208–3084–001, available at https:// www.reginfo.gov/public/do/PRAViewICR?ref_ nbr=202208-3084-001 (last visited Dec. 11, 2023). 315 2022 NPRM, 87 FR at 33690–91. 316 This PRA analysis focuses only on the information collection requirements created by or otherwise affected by these now final rule amendments. 317 See OMB Control No. 3084–0097, ICR Reference 202204–3084–004, Notice of Office of Management and Budget Action (June 16, 2022). 318 See, e.g., ECAC 34–22 at 3; NFIB 33–4 at 4– 5; Sirius 34–18 at 7–8. 319 See, e.g., NAAG 34–20 at 9; PACE 33–15 at 2– 5. VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 each unique prerecorded message; (2) call detail records of telemarketing campaigns; (3) records sufficient to show a seller has an established business relationship with a consumer; (4) records sufficient to show a consumer is a previous donor to a particular charitable organization; (5) records regarding the service providers that a telemarketer uses to deliver outbound calls; (6) records of a seller or charitable organization’s entity-specific do-not-call registries; and (7) records of which version of the Commission’s DNC Registry were used to ensure compliance with this Rule. The Final Rule modifies existing recordkeeping requirements by: (1) changing the timeperiod for retaining records from two years to five years; 320 (2) clarifying the records necessary for sellers or telemarketers to demonstrate that the person it is calling has consented to receive the call; and (3) specifying the format for records that include phone numbers, time, or call duration. As explained above and in the 2022 NPRM,321 the Commission believes that for the most part, sellers and telemarketers already generate and retain these records either because the TSR already requires it or because they already do so in the ordinary course of business. For example, to comply with the TSR, sellers and telemarketers must already have a reliable method to identify whether they have a previous business relationship with a customer or whether the customer is a prior donor. They must also access the DNC Registry and maintain an entity-specific DNC registry. Moreover, sellers and telemarketers are also likely to keep records about their existing customers or donors and service providers in the ordinary course of business. The Final Rule now further requires telemarketers and sellers to keep call detail records of their telemarketing campaigns. Specifically, it requires sellers and telemarketers to keep call detail records of their telemarketing campaigns because in the Commission’s 320 As described above in Section II.A— Recordkeeping and in the 2022 NPRM, changing industry practice including increased spoofing of Caller ID information has made it more difficult to identify the telemarketers and sellers responsible for particular telemarketing campaigns and has hindered evidence gathering. As a result, two years is no longer always a sufficient amount of time for the Commission to fully complete its investigations of noncompliance and therefore the Commission is increasing the required retention period for recordkeeping under the Rule. Given the decreasing cost of data storage, the Commission does not believe that changing the length of time sellers and telemarketers are required to keep records will be unduly burdensome. 2022 NPRM, 87 FR at 33680– 82, 33686. 321 2022 NPRM, 87 FR at 33690–91. PO 00000 Frm 00026 Fmt 4700 Sfmt 4700 experience, sellers and telemarketers use technologies that can easily generate these records. If a seller or telemarketer does not use such technology, however, and an individual telemarketer must manually enter a single telephone number to initiate a call to that number, then the seller or telemarketer does not need to retain records of the calling number, called number, date, time, duration and disposition of the telemarketing call under Sections 310.5(a)(2)(vii) and (x) of the Final Rule for those calls. The Commission made this modification to reduce the anticipated PRA burden for those sellers and telemarketers who manually place telemarketing calls. However, as a matter of caution, the Commission estimates the anticipated PRA burden will stay roughly the same as what was projected in 2022 NPRM, because that estimate was largely based on the use of automated mechanisms. Further, the Commission’s enforcement of the Rule and review of the comments shows few sellers and telemarketers manually place telemarketing calls.322 Thus, the anticipated PRA burden could be significantly lower than the estimates set out below. A. Estimated Annual Hours Burden The Commission estimates the PRA burden of the Final Rule based on its knowledge of the telemarketing industry and data compiled from the Do Not Call Registry. In calendar year 2022, 10,804 telemarketing entities accessed the Do Not Call Registry; however, 549 were exempt entities obtaining access to data.323 Of the non-exempt entities, 6,562 obtained data for a single State. Staff assumes these 6,562 entities are operating solely intrastate, and thus would not be subject to the TSR. Therefore, Staff estimates approximately 3,693 telemarketing entities (10,804— 549 exempt—6,562 intrastate) are currently subject to the TSR. The Commission also estimates there will be 75 new entrants to the industry per year. The Commission has previously estimated that complying with the TSR’s current recordkeeping requirements requires 100 hours for new entrants to develop recordkeeping systems that comply with the TSR and 1 hour per year for established entities to file and store records after their systems are created, for a total annual 322 See, e.g., PACE 33–15 at 2. National Do not Call Registry Data Book for Fiscal Year 2022 (‘‘Data Book’’), available at https://www.ftc.gov/system/files/ftc_gov/pdf/DNCData-Book-2022.pdf (last visited Dec. 11, 2023). An exempt entity is one that, although not subject to the TSR, voluntarily chooses to scrub its calling lists against the data in the Registry. 323 See E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations recordkeeping burden of 4,385 hours for established entities and 7,500 hours for new entrants who must develop required record systems.324 Because the Final Rule contains new recordkeeping requirements, the Commission anticipates that in the first year after the proposed amendments take effect, every entity subject to the TSR would need to ensure that their recordkeeping systems meet the new requirements. The Commission estimates this undertaking will take 50 hours. This includes 10 hours to verify the entities are maintaining the required records, and 40 hours to create and retain call detail records. This yields an additional one-time burden of 184,650 hours for established entities (50 hours × 3,693 covered entities). For new entrants, the Commission estimates that the new requirements will increase their overall burden for establishing new recordkeeping systems by 50 hours per year. This yields a total added burden for new entrants of 3,750 hours (50 hours × 75 new entrants per year) in addition to what OMB has already approved.325 khammond on DSKJM1Z7X2PROD with RULES B. Estimated Annual Labor Costs The Commission estimates annual labor costs by applying appropriate hourly wage rates to the burden hours described above. The Commission estimates that established entities will employ skilled computer support specialists to modify their recordkeeping systems. Applying a skilled labor rate of $30.97/hour 326 to the estimated 184,650 burden hours for established entities yields approximately $5,718,611 in one-time labor costs during the first year after the amendments take effect. As described above, the Commission estimates that with the Final Rule new entrants will spend approximately 50 additional hours per year to establish new recordkeeping systems. Applying a skilled labor rate of $30.97/hour to the estimated 3,750 burden hours for new 324 See Information Collection Activities; Proposed Collection; Comment Request 87 FR 23177 (Apr. 19, 2022). 325 See ‘‘Recordkeeping for new entrants for live & prerecorded calls’’ under IC (Information Collection) List, available at https:// www.reginfo.gov/public/do/PRAViewIC?ref_ nbr=202208-3084-001&icID=185985 (last visited Dec. 11, 2023). 326 This figure is derived from the mean hourly wage shown for ‘‘Computer Support Specialist.’’ See ‘‘Occupational Employment and Wages-May 2022’’ Bureau of Labor Statistics, U.S. Department of Labor, Last Modified April 25, 2023, Table 1 (‘‘National employment and wage data from the Occupational Employment Statistics survey by occupation, May 2022’’) available at https:// www.bls.gov/news.release/pdf/ocwage.pdf (last visited October 24, 2023). VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 26781 entrants, the Commission estimates that the annual labor costs for new entrants would be approximately $116,138. entities per year for electronic storage. This equates to roughly $18,840 in total for all covered entities. C. Estimated Non-Annual Labor Costs Staff previously estimated the nonlabor costs to comply with the TSR’s recordkeeping requirements were de minimis because most affected entities would maintain the required records in the ordinary course of business. Staff estimated that the recordkeeping requirements could require $50 per year in office supplies to comply with the Rule’s recordkeeping requirements. Because the Final Rule requires retention of additional records, Staff estimates that these requirements will increase to $60 per year in office supplies on average for each of the 3,768 covered entities per year in office supplies. This equates to roughly $226,080 in total for all covered entities. The new recordkeeping requirements also require entities to retain call detail records and audio recordings of prerecorded messages used in calls. Staff estimates the costs associated with preserving these records will also be de minimis. The Commission regularly obtains call detail records from voice providers when investigating potential TSR violations, and these records are kept in databases with small file sizes even when the database contains information about a substantial number of calls. For example, the Commission received a 2.9 gigabyte database that contained information about 56 million calls. The Commission also received a 1.2 gigabyte database that contained information about 5.5 million calls. Similarly, audio files of most prerecorded messages will not be very large because prerecorded messages are typically short in duration. Storing electronic data is very inexpensive. Electronic storage can cost $.74 per gigabyte for onsite storage including hardware, software, and personnel costs.327 Commercial cloud-based storage options are less expensive and can cost around $.20 per gigabyte per year.328 The Commission estimates the non-labor costs associated with electronically storing audio files of prerecorded messages and call detail records will cost around $5 a year on average for each of the 3,768 covered V. Regulatory Flexibility Act The Regulatory Flexibility Act (‘‘RFA’’), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires that the Commission conduct an analysis of the anticipated economic impact of the proposed amendments on small entities.329 The RFA requires that the Commission provide an Initial Regulatory Flexibility Analysis (‘‘IRFA’’) with a proposed rule and a Final Regulatory Flexibility Analysis (‘‘FRFA’’) with the Final Rule unless the Commission certifies that the rule will not have a significant economic impact on a substantial number of small entities.330 As discussed in the 2022 NPRM, the Commission did not believe the proposed amendment requiring additional recordkeeping would have a significant economic impact upon small entities, although it may affect a substantial number of small businesses.331 In the Commission’s view, the proposed amendment would not significantly increase the costs of small entities that are sellers or telemarketers because the proposed amendments primarily require these entities to retain records that they are already generating and preserving in the ordinary course of business. The Commission also did not believe that the proposed amendments requiring small entities that are sellers or telemarketers to comply with the TSR’s prohibitions on misrepresentations should impose any additional costs. Therefore, based on available information, the Commission certified that amending the Rule as proposed would not have a significant economic impact on a substantial number of small entities, and provided notice of that certification to the Small Business Administration (‘‘SBA’’).332 Notwithstanding the certification, the Commission also published an IRFA in the 2022 NPRM and invited comment on the impact the proposed amendments would have on small entities covered by the Rule.333 The Commission did not receive any comments that provided empirical information on the burden the proposed amendments would have on small entities, but some commenters raised 327 See Gartner, Inc. ‘‘IT Key Metrics Data 2020: Infrastructure Measures—Storage Analysis.’’ Gartner December 18, 2019. 328 Amazon’s storage rate for S3 Standard— Infrequent Access storage is $0.0125 per GB per month. See https://aws.amazon.com/s3/pricing/ ?nc=sn&loc=4 (last visited Dec. 11, 2023); Google’s storage rate for Archive Storage in parts of North America is $0.0012 per GB per month. See https:// cloud.google.com/storage/pricing (last visited Dec. 11, 2023). PO 00000 Frm 00027 Fmt 4700 Sfmt 4700 329 5 U.S.C. 601–612. U.S.C. 605. 331 2022 NPRM, 87 FR at 33691–92. 332 5 U.S.C. 605(b). 333 Id. 330 5 E:\FR\FM\16APR1.SGM 16APR1 26782 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES general burden concerns, in particular with respect to the recordkeeping requirement that sellers and telemarketers retain call detail records.334 As discussed in more detail in Section III—Final Amended Rule, the Commission does not believe the Final Rule would impose significant additional burden since the recordkeeping amendments primarily require small entities that are sellers and telemarketers to retain records that they would keep in the ordinary course of business. The Commission also amended the Final Rule so that entities that do not utilize certain technology are not required to retain certain call detail records, to reduce the burden imposed on those entities.335 Finally, the FTC Act already requires sellers and telemarketers that are small entities to comply with the Final Rule’s prohibition against misrepresentations in telemarketing. Thus, the Commission certifies that the Final Rule would not have a significant economic impact on a substantial number of small entities and provides notice of that certification to the Small Business Administration (‘‘SBA’’).336 The Commission has nonetheless deemed it appropriate as a matter of discretion to provide this FRFA. A. Statement of the Need for, and Objectives of, the Rule The Final Rule requires telemarketers and sellers to maintain additional records regarding their telemarketing transactions. As described in the 2022 NPRM 337 and in Section II—Overview of the Proposed Amendments to the TSR, the Final Rule updates the TSR’s existing recordkeeping requirements so that the requirements comport with the substantial amendments to the TSR since the recordkeeping requirements were first made. The requirements are also necessary in light of the technological advancements that have made it easier and cheaper for unscrupulous telemarketers to engage in illegal telemarketing. The Final Rule also requires B2B telemarketers to comply with the TSR’s prohibition on misrepresentations. These amendments are necessary to help protect businesses from deceptive telemarketing practices. The Final Rule also amends the definition of ‘‘previous donor’’ to clarify that a seller or telemarketer may not use prerecorded messages to solicit charitable donations on behalf of a charitable organization unless the 334 See, e.g., NFIB 33–4 at 4–5; PACE 33–15 at 2. Section III.A.2 (Call Detail Records). 336 5 U.S.C. 605(b). 337 2022 NPRM, 87 FR at 33678–84. 335 Supra VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 recipient of the call previously donated to that charitable organization within the last two years. B. Issues Raised by Public Comments in Response to the IRFA As stated above, the Commission did not receive any comments relating to the IRFA or that provided empirical information on the burden the proposed amendments would have on small entities, but some commenters raised general burden concerns. The Commission details these concerns and its responses in more detail in Section III—Final Amended Rule. Commenters stated, in particular, that requiring retention of call detail records and each version of the DNC used for compliance would cause significant burden to businesses. Commenters also argued changing the time period to retain records from two years to five years would also impose additional burdens. To address concerns regarding the burden of retaining call detail records, the Final Rule provides an exemption for calls made by an individual telemarketer who manually enters a single telephone number to initiate those calls. For such calls, the seller or telemarketer does not need to retain records of the calling number, called number, date, time, duration, and disposition of the call. This modification should address burden concerns raised for small businesses which do not employ software or other technology to automate their telemarketing activity and still use manual operations. The Final Rule also provides a one hundred and eighty-day grace period from the date Section 310.5(a)(2)— which requires retention of call detail records—is published in the Federal Register so sellers and telemarketers can implement any new systems, software, or procedures necessary to comply with this new provision. This modification similarly should alleviate commenters’ concerns regarding the time necessary to come into compliance. The Final Rule also modifies the recordkeeping requirement regarding DNC compliance and now requires records of which version of the DNC rather than each version used for compliance, significantly reducing the burden associated with this requirement. With respect to the time period to retain records, the Commission does not believe changing the time period to retain records would impose a significant burden because many businesses already retain the necessary records in the ordinary course of business. PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 C. Estimated Number of Small Entities to Which the Final Rule Will Apply The Final Rule affects sellers and telemarketers engaged in ‘‘telemarketing,’’ defined by the Rule to mean ‘‘a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call.’’ 338 As noted above, staff estimate 3,693 telemarketing entities are currently subject to the TSR, and approximately 75 new entrants enter the market per year. For telemarketers, a small business is defined by the SBA as one whose average annual receipts do not exceed $25.5 million.339 Because virtually any business could be a seller under the TSR, it is not possible to identify average annual receipts that would make a seller a small business as defined by the SBA. Commission staff are unable to determine a precise estimate of how many sellers or telemarketers constitute small entities as defined by SBA. The Commission sought comment on this issue but did not receive any information from commenters. D. Projected Reporting, Recordkeeping, and Other Compliance Requirements, Including Classes of Small Entities and Professional Skills Needed To Comply The Final Rule contains new recordkeeping requirements and modifications to existing recordkeeping requirements. The new recordkeeping requirements would require sellers or telemarketers to retain: (1) a copy of each unique prerecorded message; (2) call detail records of telemarketing campaigns; (3) records sufficient to show a seller has an established business relationship with a consumer; (4) records sufficient to show a consumer is a previous donor to a particular charitable organization; (5) records regarding the service providers that a telemarketer uses to deliver outbound calls; (6) records of a seller or charitable organization’s entity-specific 338 16 CFR 310.2(dd). The Commission notes that, as mandated by the Telemarketing Act, the interstate telephone call requirement in the definition excludes small business sellers and the telemarketers which serve them in their local market area, but may not exclude some small business sellers and telemarketers in multi-state metropolitan markets, such as Washington, DC. 339 Telemarketers are typically classified as ‘‘Telemarketing Bureaus and Other contact Centers,’’ (NAICS Code 561422). See Table of Small Business Size Standards Matched to North American Industry Classification System Codes, available at https://www.sba.gov/sites/sbagov/files/ 2023-06/Table%20of%20Size%20Standards_ Effective%20March%2017%2C%202023%20 %282%29.pdf (last visited October 24, 2023). E:\FR\FM\16APR1.SGM 16APR1 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES do-not-call registries; and (7) records of which version of the Commission’s DNC Registry that were used to ensure compliance with this Rule. The proposed modifications to the existing recordkeeping requirements would: (1) change the time period for retaining records from two years to five years; (2) clarify the records necessary for sellers or telemarketers to demonstrate that the person they are calling has consented to receive the call; and (3) specify the format for records that include phone numbers, time, or call duration. The small entities potentially covered by the proposed amendment will include all such entities subject to the Rule. The Commission has described the skills necessary to comply with these recordkeeping requirements in Section IV—Paperwork Reduction Act above. E. Identification of Duplicative, Overlapping, or Conflicting Federal Rules The Telephone Consumer Protection Act of 1991, 47 U.S.C. 227, and its implementing regulations, 47 CFR 64.1200 (collectively, ‘‘TCPA’’) contain recordkeeping requirements that may overlap with the recordkeeping requirements proposed by the new rule. For example, the proposed provision requiring sellers or telemarketers to keep a record of consumers who state they do not wish to receive any outbound calls made on behalf of a seller or telemarketer, 16 CFR 310.5(a)(10), overlaps to some degree with the TCPA’s prohibition on a person or entity initiating a call for telemarketing unless such person or entity has procedures for maintaining lists of persons who request not to receive telemarketing calls including a requirement to record the request. The Final Rule’s recordkeeping requirements do not conflict with the TCPA’s recordkeeping requirements because sellers and telemarketers can comply with both sets of requirements simultaneously. Moreover, in the Commission’s experience, the recordkeeping requirements under the TCPA do not lessen the need for the more robust recordkeeping requirements the Commission is proposing to further its law enforcement efforts. The Commission invited comment and information regarding any potentially duplicative, overlapping, or conflicting Federal statutes, rules, or policies and received one comment about a potential conflict. OCUL argues the Commission cannot proceed with the proposed amendments until the Federal Communications Commission (‘‘FCC’’) has clarified whether it will allow the establishment VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 of a new code that will inform the telemarketer placing the call why its call was blocked.340 OCUL argues that this would lead to telemarketers and sellers being unable to keep complete or accurate records, subjecting them to violations, if they do not know why a call was blocked.341 The Commission does not see a conflict between the FCC’s ongoing rulemaking and the proposed amendments in the 2022 NPRM. The Final Rule does not require the telemarketer or seller to retain records detailing why a call was blocked. Simply stating that a call was blocked as a record of the disposition of the call will suffice. F. Description of Steps Taken To Minimize Significant Economic Impact, if any, on Small Entities, Including Alternatives The Commission has not proposed any specific small entity exemption or other significant alternatives to the proposed rule. The Commission has made every effort to avoid imposing unduly burdensome requirements on sellers and telemarketers by limiting the recordkeeping requirements to records that are both necessary for the Commission’s law enforcement and typically already kept in the ordinary course of business. As detailed above in Sections III—Final Amended Rule and IV—Paperwork Reduction Act, the Commission has made additional modifications to the proposed amendments to further reduce the burden on small entities of complying with the Final Rule. These modifications include exempting sellers or telemarketers from retaining some call detail records for calls that are manually placed, and requiring sellers and telemarketers to retain records of which version of the FTC’s DNC Registry they used rather than each version used for compliance. VI. Incorporation by Reference Consistent with 5 U.S.C. 552(a) and 1 CFR part 51, the Final Rule incorporates the specifications of the following standard issued by the International Telecommunications Union: ITU–T E.164: Series E: Overall Network Operation, Telephone Service, Service Operation and Human Factors (published 11/2010). The E.164 standard establishes a common framework for how international telephone numbers should be arranged so that calls can be routed across telephone networks. Countries use this standard to establish their own 340 OCUL 34–19 at 3. 341 Id. PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 26783 international telephone number formats and ensure that those numbers have the information necessary to route telephone calls successfully between countries. This ITU standard is reasonably available to interested parties. The ITU provides free online public access to view read-only copies of the standard. The ITU website address for access to the standard is: https://www.itu.int/en/ pages/default.aspx. VII. Congressional Review Act Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of Information and Regulatory Affairs designated these rule amendments as not a ‘‘major rule,’’ as defined by 5 U.S.C. 804(2). List of Subjects in 16 CFR Part 310 Advertising; Consumer protection; Incorporation by reference; Reporting and recordkeeping requirements; Telephone; Trade practices. For the reasons discussed in the preamble, the Federal Trade Commission amends title 16 of the Code of Federal Regulations, part 310, as follows: PART 310—TELEMARKETING SALES RULE 1. The authority for part 310 continues to read as follows: ■ Authority: 15 U.S.C. 6101–6108. 2. In § 310.2, a. Revise paragraph (q); b. Redesignate paragraphs (aa) through (hh) as (bb) through (ii); ■ c. Add a new paragraph (aa). The revisions and addition read as follows: ■ ■ ■ § 310.2 Definitions. * * * * * (q) Established business relationship means a relationship between a seller and a person based on: (1) The person’s purchase, rental, or lease of the seller’s goods or services or a financial transaction between the person and seller, within the 540 days immediately preceding the date of a telemarketing call; or (2) The person’s inquiry or application regarding a good or service offered by the seller, within the 90 days immediately preceding the date of a telemarketing call. * * * * * (aa) Previous donor means any person who has made a charitable contribution to a particular charitable organization within the 2-year period immediately preceding the date of the telemarketing E:\FR\FM\16APR1.SGM 16APR1 26784 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations call soliciting on behalf of that charitable organization. * * * * * § 310.3 [Amended] 3. In § 310.3, redesignate footnotes 659 through 663 as footnotes 1 through 5. ■ 4. In § 310.4, revise paragraph (b)(2) and redesignate footnotes 664 through 666 as footnotes 1 through 3 to read as follows: ■ § 310.4 Abusive telemarketing acts or practices. * * * * * (b) * * * (2) It is an abusive telemarketing act or practice and a violation of this part for any person to sell, rent, lease, purchase, or use any list established to comply with § 310.4(b)(1)(iii)(A) or § 310.5, or maintained by the Commission pursuant to § 310.4(b)(1)(iii)(B), for any purpose except compliance with the provisions of this part or otherwise to prevent telephone calls to telephone numbers on such lists. * * * * * ■ 5. Revise § 310.5 to read as follows: khammond on DSKJM1Z7X2PROD with RULES § 310.5 Recordkeeping requirements. (a) Any seller or telemarketer must keep, for a period of 5 years from the date the record is produced unless specified otherwise, the following records relating to its telemarketing activities: (1) A copy of each substantially different advertising, brochure, telemarketing script, and promotional material, and a copy of each unique prerecorded message. Such records must be kept for a period of 5 years from the date that they are no longer used in telemarketing; (2) A record of each telemarketing call, which must include: (i) The telemarketer that placed or received the call; (ii) The seller or person for which the telemarketing call is placed or received; (iii) The good, service, or charitable purpose that is the subject of the telemarketing call; (iv) Whether the telemarketing call is to an individual consumer or a business consumer; (v) Whether the telemarketing call is an outbound telephone call; (vi) Whether the telemarketing call utilizes a prerecorded message; (vii) The calling number, called number, date, time, and duration of the telemarketing call; (viii) The telemarketing script(s) and prerecorded message, if any, used during the call; VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 (ix) The caller identification telephone number, and if it is transmitted, the caller identification name that is transmitted in an outbound telephone call to the recipient of the call, and any contracts or other proof of authorization for the telemarketer to use that telephone number and name, and the time period for which such authorization or contract applies; and (x) The disposition of the call, including but not limited to, whether the call was answered, connected, dropped, or transferred. If the call was transferred, the record must also include the telephone number or IP address that the call was transferred to as well as the company name, if the call was transferred to a company different from the seller or telemarketer that placed the call; provided, however, that for calls that an individual telemarketer makes by manually entering a single telephone number to initiate the call to that number, a seller or telemarketer need not retain the records specified in paragraphs (a)(2)(vii) and (a)(2)(x) of this section. (3) For each prize recipient, a record of the name, last known telephone number, and last known physical or email address of that prize recipient, and the prize awarded for prizes that are represented, directly or by implication, to have a value of $25.00 or more; (4) For each customer, a record of the name, last known telephone number, and last known physical or email address of that customer, the goods or services purchased, the date such goods or services were purchased, the date such goods or services were shipped or provided, and the amount paid by the customer for the goods or services; 1 (5) For each person with whom a seller intends to assert it has an established business relationship under § 310.2(q)(2), a record of the name and last known telephone number of that person, the date that person submitted an inquiry or application regarding the seller’s goods or services, and the goods or services inquired about; (6) For each person that a telemarketer intends to assert is a previous donor to a particular charitable organization under § 310.2(aa), a record of the name and last known telephone number of that person, and the last date that person donated to that particular charitable organization; (7) For each current or former employee directly involved in telephone 1 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR pt. 226, compliance with the recordkeeping requirements under the Truth in Lending Act, and Regulation Z, will constitute compliance with § 310.5(a)(4) of this part. PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 sales or solicitations, a record of the name, any fictitious name used, the last known home address and telephone number, and the job title(s) of that employee; provided, however, that if the seller or telemarketer permits fictitious names to be used by employees, each fictitious name must be traceable to only one specific employee; (8) All verifiable authorizations or records of express informed consent or express agreement (collectively, ‘‘Consent’’) required to be provided or received under this part. A complete record of Consent includes the following: (i) The name and telephone number of the person providing Consent; (ii) A copy of the request for Consent in the same manner and format in which it was presented to the person providing Consent; (iii) The purpose for which Consent is requested and given; (iv) A copy of the Consent provided; (v) The date Consent was given; and (vi) For the copy of Consent provided under §§ 310.3(a)(3), 310.4(a)(7), 310.4(b)(1)(iii)(B)(1), or 310.4(b)(1)(v)(A), a complete record must also include all information specified in those respective sections of this part; (9) A record of each service provider a telemarketer used to deliver an outbound telephone call to a person on behalf of a seller for each good or service the seller offers for sale through telemarketing. For each such service provider, a complete record includes the contract for the service provided, the date the contract was signed, and the time period the contract is in effect. Such contracts must be kept for 5 years from the date the contract expires; (10) A record of each person who has stated she does not wish to receive any outbound telephone calls made on behalf of a seller or charitable organization pursuant to § 310.4(b)(1)(iii)(A) including: the name of the person, the telephone number(s) associated with the request, the seller or charitable organization from which the person does not wish to receive calls, the telemarketer that called the person, the date the person requested that she cease receiving such calls, and the goods or services the seller was offering for sale or the charitable purpose for which a charitable contribution was being solicited; and (11) A record of which version of the Commission’s ‘‘do-not-call’’ registry was used to ensure compliance with § 310.4(b)(1)(iii)(B). Such record must include: (i) The name of the entity which accessed the registry; E:\FR\FM\16APR1.SGM 16APR1 khammond on DSKJM1Z7X2PROD with RULES Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations (ii) The date the ‘‘do-not-call’’ registry was accessed; (iii) The subscription account number that was used to access the registry; and (iv) The telemarketing campaign for which it was accessed. (b) A seller or telemarketer may keep the records required by paragraph (a) of this section in the same manner, format, or place as they keep such records in the ordinary course of business. The format for records required by paragraph (a)(2)(vii) of this section, and any other records that include a time or telephone number, must also comply with the following: (1) The format for domestic telephone numbers must comport with the North American Numbering plan; (2) The format for international telephone numbers must comport with the standard established in the International Telecommunications Union’s Recommendation ITU–T E.164: Series E: Overall Network Operation, Telephone Service, Service Operation and Human Factors, published 11/2010 (incorporated by reference, see paragraph (g)(1) of this section); (3) The time and duration of a call must be kept to the closest second; and (4) Time must be recorded in Coordinated Universal Time (UTC). (c) Failure to keep each record required by paragraph (a) of this section in a complete and accurate manner, and in compliance with paragraph (b) of this section, as applicable, is a violation of this part. (d) For records kept pursuant to paragraph (a)(2) of this section, the seller or telemarketer will not be liable for failure to keep complete and accurate records pursuant to this part if it can demonstrate, with documentation, that as part of its routine business practice: (1) It has established and implemented procedures to ensure completeness and accuracy of its records; (2) It has trained its personnel, and any entity assisting it in its compliance, in such procedures; (3) It monitors compliance with and enforces such procedures, and maintains records documenting such monitoring and enforcement; and (4) Any failure to keep complete and accurate records was temporary, due to inadvertent error, and corrected within 30 days of discovery. (e) The seller and the telemarketer calling on behalf of the seller may, by written agreement, allocate responsibility between themselves for the recordkeeping required by this section. When a seller and telemarketer have entered into such an agreement, VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 the terms of that agreement will govern, and the seller or telemarketer, as the case may be, need not keep records that duplicate those of the other. If by written agreement the telemarketer bears the responsibility for the recordkeeping requirements of this section, the seller must establish and implement practices and procedures to ensure the telemarketer is complying with the requirements of this section. These practices and procedures include retaining access to any record the telemarketer creates under this section on the seller’s behalf. If the agreement is unclear as to who must maintain any required record(s), or if no such agreement exists, both the telemarketer and the seller are responsible for complying with this section. (f) In the event of any dissolution or termination of the seller’s or telemarketer’s business, the principal of that seller or telemarketer must maintain all records required under this section. In the event of any sale, assignment, or other change in ownership of the seller’s or telemarketer’s business, the successor business must maintain all records required under this section. (g) The material required in this section is incorporated by reference into this section with the approval of the Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. All approved material is available for inspection at the Federal Trade Commission (FTC) and at the National Archives and Records Administration (NARA). Contact FTC at: FTC Library, (202) 326–2395, Federal Trade Commission, Room H–630, 600 Pennsylvania Avenue NW, Washington, DC 20580, or by email at Library@ ftc.gov. For information on the availability of this material at NARA, email fr.inspection@nara.gov or go to www.archives.gov/federal-register/cfr/ ibr-locations.html. It is available from: The International Telecommunications Union, Telecommunications Standardization Bureau, Place des Nations, CH–1211 Geneva 20; (+41 22 730 5852); https://www.itu.int/en/ pages/default.aspx. (1) Recommendation ITU–T E.164: Series E: Overall Network Operation, Telephone Service, Service Operation and Human Factors, published 11/2010. (2) [Reserved] ■ 6. Amend § 310.6 as follows: ■ a. In paragraphs (b)(1), (b)(2), and (b)(3), remove the words ‘‘§§ 310.4(a)(1), (a)(7), (b), and (c)’’ and add, in their place, the words ‘‘§ 310.4(a)(1), (a)(8), (b), and (c)’’; and ■ b. Revise paragraph (b)(7) to read as follows: PO 00000 Frm 00031 Fmt 4700 Sfmt 4700 § 310.6 26785 Exemptions. * * * * * (b) * * * (7) Telephone calls between a telemarketer and any business to induce the purchase of goods or services or a charitable contribution by the business, provided, however that this exemption does not apply to: (i) The requirements of § 310.3(a)(2) and(4); or (ii) Calls to induce the retail sale of nondurable office or cleaning supplies; provided, however, that §§ 310.4(b)(1)(iii)(B) and 310.5 shall not apply to sellers or telemarketers of nondurable office or cleaning supplies. 7. Amend § 310.7 by revising paragraph (a) to read as follows: ■ § 310.7 Actions by states and private persons. (a) Any attorney general or other officer of a State authorized by the State to bring an action under the Telemarketing and Consumer Fraud and Abuse Prevention Act, and any private person who brings an action under that Act, must serve written notice of its action on the Commission, if feasible, prior to its initiating an action under this part. The notice must be sent to the Office of the Director, Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580, at tsrnotice@ftc.gov and must include a copy of the State’s or private person’s complaint and any other pleadings to be filed with the court. If prior notice is not feasible, the State or private person must serve the Commission with the required notice immediately upon instituting its action. * * * * * §§ 310.3, 310.4, 310.6, 310.8, 310.9 [Amended] 8. In addition to the amendments set forth above, in 16 CFR part 310, remove the words ‘‘this Rule’’ and add, in their place, the words ‘‘this part’’ in the following places: ■ a. Section 310.3(a) introductory text, (b), (c) introductory text, (d) introductory text, and newly redesignated footnotes 2 and 5. ■ b. Section 310.4(a) introductory text, (a)(2)(ii), (b)(1) introductory text, (b)(2), (c), (d) introductory text, (e) introductory text, and newly redesignated footnotes 1 and 2; ■ c. Section 310.6(a) and (b) introductory text; ■ d. Section 310.8(a), (b), and (e); and ■ e. Section 310.9. ■ E:\FR\FM\16APR1.SGM 16APR1 26786 Federal Register / Vol. 89, No. 74 / Tuesday, April 16, 2024 / Rules and Regulations By direction of the Commission. Joel Christie, Acting Secretary. [FR Doc. 2024–07180 Filed 4–15–24; 8:45 am] BILLING CODE 6750–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 301 [TD 9988] RIN 1545–BQ63 Elective Payment of Applicable Credits Correction In rule document 2024–04604, beginning on page 17546, in the issue of Monday, March 11, 2024, the title is corrected to read as set for above. [FR Doc. C1–2024–04604 Filed 4–15–24; 8:45 am] BILLING CODE 0099–10–D FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 11, 73, and 74 [MB Docket No. 20–401; FCC 24–35; FR ID 213398] Program Originating FM Broadcast Booster Stations Federal Communications Commission. ACTION: Final rule. AGENCY: In a Report and Order, the Federal Communications Commission (Commission) finds that allowing FM booster stations to originate content on a limited basis would serve the public interest. The Report and Order adopts rules to allow for the voluntary implementation of program originating FM booster stations, subject to future adoption of processing, licensing, and service rules proposed concurrently in a further notice of proposed rulemaking, published elsewhere in this issue of the Federal Register. The rule changes in this document are needed to expand the potential uses of FM booster stations, which currently may not originate programming. The intended effect is to allow radio broadcasters to provide more relevant localized programming and information to different zones within their service areas. DATES: Effective date: May 16, 2024. FOR FURTHER INFORMATION CONTACT: Albert Shuldiner, Chief, Media Bureau, Audio Division, (202) 418–2721, Albert.Shuldiner@fcc.gov; Irene khammond on DSKJM1Z7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 16:18 Apr 15, 2024 Jkt 262001 Bleiweiss, Attorney, Media Bureau, Audio Division, (202) 418–2785, Irene.Bleiweiss@fcc.gov. For additional information concerning the Paperwork Reduction Act (PRA) information collection requirements contained in this document, contact Cathy Williams at (202) 418–2918, Cathy.Williams@ fcc.gov. SUPPLEMENTARY INFORMATION: This is a summary of the Commission’s Report and Order (R&O), MB Docket No. 20– 401; FCC 24–35, adopted on March 27, 2024, and released on April 2, 2024. The full text of this document will be available via the FCC’s Electronic Comment Filing System (ECFS), https:// www.fcc.gov/cgb/ecfs/. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. Alternative formats are available for people with disabilities (braille, large print, electronic files, audio format), by sending an email to fcc504@fcc.gov or calling the Commission’s Consumer and Governmental Affairs Bureau at (202) 418–0530 (voice), (202) 418–0432 (TTY). The Commission published the notice of proposed rulemaking (NPRM) at 86 FR 1909 on January 11, 2021. Paperwork Reduction Act of 1995 Analysis This document does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104–13. In addition, therefore, it does not contain any new or modified information collection burdens for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107–198, see 44 U.S.C. 3506(c)(4). Congressional Review Act The Commission has determined, and the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, concurs, that these rules are non-major under the Congressional Review Act, 5 U.S.C. 804(2). The Commission will send a copy of the R&O to Congress and the Government Accountability Office (GAO) pursuant to 5 U.S.C. 801(a)(1)(A). Synopsis 1. Introduction. In the R&O, the Commission expands the potential uses of FM boosters, which are low power, secondary stations that operate in the FM broadcast band. As a secondary service, FM booster stations are not permitted to cause adjacent-channel interference to other primary services or previously-authorized secondary stations. They must operate on the same PO 00000 Frm 00032 Fmt 4700 Sfmt 4700 frequency as the primary station, and have been limited to rebroadcasting the primary station’s signal in its entirety (i.e., no transmission of original content). Historically, the sole use of FM boosters has been to improve signal strength of primary FM stations in areas where reception is poor due to terrain or distance from the transmitter. The R&O amends the Commission’s rules to allow FM and low power FM (LPFM) broadcasters to employ FM booster stations to originate programming for up to three minutes per hour. This represents a change from current requirements of 47 CFR 74.1201(f) and 74.1231 which, respectively, define FM booster stations as not altering the signal they receive from their primary FM station and prohibit FM boosters from making independent transmissions. 2. GeoBroadcast Solutions, LLC (GBS), the proponent of the rule changes, has developed technology designed to allow licensees of primary FM and LPFM broadcast stations to ‘‘geo-target’’ a portion of their programming by using FM boosters to originate different content for different parts of their service areas. Prior to proposing rule changes, GBS tested its technology under different conditions in three radio markets and concluded that the technology could be deployed for limited periods of time within the primary station’s protected service contour without causing any adjacentchannel interference, and that any resulting co-channel interference (selfinterference to the licensee’s own signal) would be manageable and not detrimental to listeners. GBS filed a Petition for Rulemaking (Petition) seeking to allow FM boosters to originate programming. The Petition suggested that geo-targeted broadcasting can deliver significant value to broadcasters, advertisers, and listeners in distinct communities by broadcasting more relevant localized information and advancing diversity. Stations might, for example, air hyper-local news and weather reports most relevant to a particular community. Stations also might air advertisements or underwriting acknowledgements from businesses that are only interested in reaching small geographic areas, thereby enhancing the stations’ ability to compete for local support. GBS pointed out that many other types of media, such as online content providers, cable companies, and newspapers are able to differentiate their content geographically, but that no such option has existed for radio broadcasting. On April 2, 2020, the Consumer and Governmental Affairs Bureau issued a E:\FR\FM\16APR1.SGM 16APR1

Agencies

FEDERAL TRADE COMMISSION

[Federal Register Volume 89, Number 74 (Tuesday, April 16, 2024)]
[Rules and Regulations]
[Pages 26760-26786]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07180]


=======================================================================
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FEDERAL TRADE COMMISSION

16 CFR Part 310

RIN 3084-AB19


Telemarketing Sales Rule

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') 
adopts amendments to the Telemarketing Sales Rule (``TSR'') that, among 
other things, require telemarketers and sellers to maintain additional 
records of their telemarketing transactions, prohibit material 
misrepresentations and false or misleading statements in business to 
business (``B2B'') telemarketing calls, and add a new definition for 
the term ``previous donor.'' These amendments are necessary to address 
technological advances and to continue protecting consumers, including 
small businesses, from deceptive or abusive telemarketing practices.

DATES: The amendments are effective May 16, 2024. However, compliance 
with 16 CFR 310.5(a)(2) is not required until October 15, 2024. The 
incorporation by reference of certain material listed in the rule is 
approved by the Director of the Federal Register as of May 16, 2024.

ADDRESSES: Relevant portions of the record of this proceeding, 
including this document, are available at https://www.ftc.gov.

FOR FURTHER INFORMATION CONTACT: Patricia Hsue, (202) 326-3132, 
[email protected], or Benjamin R. Davidson, (202) 326-3055, 
[email protected], Division of Marketing Practices, Bureau of Consumer 
Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Mail 
Stop CC-6316, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: This document states the basis and purpose 
for the Commission's decision to adopt amendments to the TSR that were 
proposed and published for public comment in the Federal Register on 
June 3, 2022 in a Notice of Proposed Rulemaking (``2022 NPRM'').\1\ 
After careful review and consideration of the entire record on the 
issues presented in this rulemaking proceeding, including 26 public 
comments submitted by a variety of interested parties, the Commission 
has decided to adopt, with several modifications, the proposed 
amendments to the TSR intended to curb deceptive or abusive practices 
in telemarketing and improve the effectiveness of the TSR.
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    \1\ Notice of Proposed Rulemaking (``2022 NPRM''), 87 FR 33677 
(June 3, 2022).
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I. Background

    Congress enacted the Telemarketing and Consumer Fraud and Abuse 
Prevention Act (``Telemarketing Act'' or ``Act'') in 1994 to curb 
abusive telemarketing practices and provide key anti-fraud and privacy 
protections to consumers.\2\ The Act directed the Commission to adopt a 
rule prohibiting deceptive or abusive telemarketing practices.\3\ The 
Act also directed the Commission to include, among other provisions, 
disclosure requirements and to consider recordkeeping requirements in 
its rulemaking.\4\ Pursuant to the Act, the Commission promulgated the 
TSR on August 23, 1995.\5\
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    \2\ Public Law 103-297, 108 Stat. 1545 (1997) (codified as 
amended at 15 U.S.C. 6101 through 6108).
    \3\ 15 U.S.C. 6102(a)(1).
    \4\ 15 U.S.C. 6102(a)(3).
    \5\ See Statement of Basis and Purpose and Final Rule 
(``Original TSR''), 60 FR 43842 (Aug. 23, 1995).
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    The Rule prohibits deceptive or abusive telemarketing practices, 
such as misrepresenting several categories of material information or 
making false or misleading statements to induce a person to pay for a 
good or service.\6\ The Rule also requires sellers and telemarketers to 
make specific disclosures and keep certain records of their 
telemarketing activities.\7\ The Commission determined that 
recordkeeping requirements were necessary to ``ascertain whether 
sellers and telemarketers are complying with the [. . .TSR], identify 
persons who are involved in any challenged practices, and [ ] identify 
customers who may have been injured.'' \8\
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    \6\ See, e.g., 16 CFR 310.3(a); see also Original TSR, 60 FR at 
43848-51.
    \7\ See, e.g., 16 CFR 310.3(a)(1), 310.5; see also Original TSR, 
60 FR at 43846-48, 43851, 43857.
    \8\ Original TSR, 60 FR at 43857.
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    Since 1995, the Commission has amended the Rule on four occasions: 
(1) in 2003 to create the National Do Not Call (``DNC'') Registry and 
extend the Rule to telemarketing calls soliciting charitable 
contributions (``charity calls''); \9\ (2) in 2008 to prohibit 
prerecorded messages (``robocalls'') in sales calls and charity calls; 
\10\ (3) in 2010 to ban the telemarketing of debt relief services 
requiring an advance fee; \11\ and (4) in 2015 to bar the use in 
telemarketing of certain payment mechanisms widely used in fraudulent 
transactions.\12\
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    \9\ See Statement of Basis and Purpose and Final Amended Rule 
(``2003 TSR Amendments''), 68 FR 4580 (Jan. 29, 2003) (adding Do Not 
Call Registry, charitable solicitations, and other provisions). The 
Telemarketing Act was amended in 2001 to extend its coverage to 
telemarketing calls seeking charitable contributions. See Uniting 
and Strengthening America by Providing Appropriate Tools Required to 
Intercept and Obstruct Terrorism Act (``USA PATRIOT Act''), Public 
Law 107-56, 115 Stat. 272 (Oct. 26, 2001) (adding charitable 
contribution to the definition of telemarketing and amending the Act 
to require certain disclosures in calls seeking charitable 
contributions).
    \10\ See Statement of Basis and Purpose and Final Rule 
Amendments (``2008 TSR Amendments''), 73 FR 51164 (Aug. 29, 2008) 
(addressing the use of robocalls).
    \11\ See Statement of Basis and Purpose and Final Rule 
Amendments (``2010 TSR Amendments''), 75 FR 48458 (Aug. 10, 2010) 
(adding debt relief provisions including a prohibition on 
misrepresenting material aspects of debt relief services in Section 
310.3(a)(2)(x)). The Commission subsequently published technical 
corrections to Section 310.4 of the TSR. 76 FR 58716 (Sept. 22, 
2011).
    \12\ See Statement of Basis and Purpose and Final Rule 
Amendments (``2015 TSR Amendments''), 80 FR 77520 (Dec. 14, 2015) 
(prohibiting the use of remotely created checks and payment orders, 
cash-to-cash money transfers, and cash reload mechanisms).
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    Despite making significant amendments to the Rule, the Commission 
has not updated the recordkeeping provisions since the Rule's inception 
in 1995.\13\ Evolutions in technology and the marketplace have made it 
more difficult for regulators to enforce the TSR, particularly 
provisions relating to the DNC Registry.\14\ As a result, the 
Commission solicited comment during its regulatory review process on 
whether it should update the recordkeeping provisions, and subsequently 
proposed amending them in the 2022 NPRM.\15\
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    \13\ When the Commission decided in 2003 and 2010 to make 
substantive amendments to the TSR, it declined to modify the Rule's 
recordkeeping provisions. See 2003 TSR Amendments, 68 FR at 4645, 
4653-54 (declining to implement any of the suggested recordkeeping 
revisions that were raised in the public comments); 2010 TSR 
Amendments, 75 FR at 48502.
    \14\ 2022 NPRM, 87 FR at 33679-81.
    \15\ The Commission issued the 2022 NPRM after it had embarked 
on a regulatory review of the TSR in 2014. In that review, it sought 
feedback on a number of issues, including the existing recordkeeping 
requirements. See 2014 TSR Rule Review, 79 FR 46732, 46735 (Aug. 11, 
2014).
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    The 2022 NPRM also proposed applying the TSR's prohibitions on 
deceptive telemarketing to B2B calls.\16\ The original TSR generally 
excluded

[[Page 26761]]

B2B calls, except those selling office and cleaning supplies, because 
in the Commission's experience at the time, those calls were ``by far 
the most significant business-to-business problem area.'' \17\ In 2003, 
the Commission considered extending the TSR's protections to B2B calls 
selling internet or web services, but decided against doing so for fear 
of chilling technological innovation.\18\ It did, however, note it 
would ``continue to monitor closely'' B2B telemarketing practices in 
this area and ``may revisit the issue in subsequent Rule Reviews should 
circumstances warrant.'' \19\ Since then, the Commission has continued 
to see small businesses harmed by deceptive B2B telemarketing, and the 
2022 NPRM proposed extending Section 310.3(a)(2)'s prohibition on 
misrepresentations \20\ and Section 310.3(a)(4)'s prohibition on false 
or misleading statements \21\ to B2B calls.\22\
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    \16\ 2022 NPRM, 87 FR at 33682-83.
    \17\ Original TSR, 60 FR at 43867, 43861.
    \18\ 2003 TSR Amendments, 68 FR at 4663; 2022 NPRM, 87 FR at 
33682-83.
    \19\ 2003 TSR Amendments, 68 FR at 4663; 2022 NPRM, 87 FR at 
33682-83.
    \20\ Section 310.3(a)(2) prohibits, among other things, 
misrepresenting: the total cost to purchase a good or service, 
material restrictions on the use of the good or service, material 
aspects of the central characteristics of the good or service, 
material aspects of the seller's refund policy, the seller's 
affiliation with or endorsement by any person or government agency, 
or material aspects of a negative option feature or debt relief 
service. See 16 CFR 310.3(a)(2)(i)-(x).
    \21\ Section 310.3(a)(4) prohibits making false or misleading 
statements to induce any person to pay for goods or services or 
induce a charitable contribution. See 16 CFR 310.3(a)(4).
    \22\ 2022 NPRM, 87 FR at 33682-83. When the Commission issued 
the 2022 NPRM, it also issued an Advance Notice of Proposed 
Rulemaking (``2022 ANPR'') in which it sought public comment on 
whether to extend all of the TSR's protections to B2B calls. 2022 
ANPR, 87 FR 33662 (June 3, 2022). The Commission addresses the 
public comments submitted in response to the 2022 ANPR in a Notice 
of Proposed Rulemaking that the Commission is issuing simultaneously 
with this Final Rule.
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    Finally, the 2022 NPRM proposed adding a definition for ``previous 
donor.'' In 2008 the Commission amended the TSR to prohibit robocalls, 
but allowed charity robocalls if the recipient is a ``member of, or 
previous donor to, a non-profit charitable organization on whose behalf 
the call is made.'' \23\ The Commission intended this narrow exemption 
to apply only to consumers who had previously donated to the soliciting 
organization,\24\ but the Commission did not define ``previous donor.'' 
\25\ The new definition will clarify that telemarketers are prohibited 
from making charity robocalls unless the call recipient donated to the 
soliciting non-profit charitable organization (``charity'') within the 
last two years.\26\
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    \23\ See 2008 TSR Amendments, 73 FR at 51185. To qualify for 
this narrow exemption, sellers and telemarketers must also comply 
with the provisions of Section 310.4(b)(1)(v)(B).
    \24\ Id.
    \25\ Pursuant to the USA PATRIOT Act, the Commission amended the 
TSR in 2003 to extend its coverage to charity calls. 2003 TSR 
Amendments, 68 FR at 4582. As part of that amendment, the Commission 
defined ``donor'' as ``any person solicited to make a charitable 
contribution.'' Id. at 4590.
    \26\ 2022 NPRM, 87 FR at 33679.
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II. Overview of the Proposed Amendments to the TSR

A. Recordkeeping

    The TSR's recordkeeping provisions, which have remained unchanged 
since the Rule was promulgated in 1995, generally require telemarketers 
and sellers to keep for a 24-month period records of: (1) any 
substantially different advertisement, including telemarketing scripts; 
(2) lists of prize recipients, customers, and telemarketing employees 
directly involved in sales or solicitations; and (3) all verifiable 
authorizations or records of express informed consent or express 
agreement.\27\ They may keep the records in any form and in the same 
manner and format as they would keep such records in the ordinary 
course of business, and they may allocate responsibilities of complying 
with the Rule's recordkeeping requirements between the seller and 
telemarketer.\28\
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    \27\ 16 CFR 310.5(a).
    \28\ 16 CFR 310.5(b) & (c).
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    The telemarketing landscape has changed drastically since 1995. 
Technological advancements have made it easier and cheaper for 
unscrupulous telemarketers to engage in illegal telemarketing, 
resulting in a greater proliferation of unwanted calls.\29\ Bad actors 
hide their identities by using technology to ``spoof'' or fake a 
calling number, making it more difficult for the Commission to identify 
the responsible parties or obtain records of their illegal 
telemarketing activities.\30\ Technology also allows these bad actors 
to operate from anywhere in the world, posing additional challenges to 
the Commission's law enforcement efforts.\31\
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    \29\ See, e.g., Prepared Statement of the Federal Trade 
Commission Before the United States Senate Committee on Commerce, 
Science and Transportation: Abusive Robocalls and How We Can Stop 
Them (Apr. 18, 2018), available at https://www.ftc.gov/system/files/documents/public_statements/1366628/p034412_commission_testimony_re_abusive_robocalls_senate_04182018.pdf
 (last visited Dec. 11, 2023); see also Prepared Statement of the 
Federal Trade Commission: Oversight of the Federal Trade Commission 
Before the United States Senate Committee on Commerce, Science, and 
Transportation (Aug. 5, 2020), available at https://www.ftc.gov/system/files/documents/public_statements/1578963/p180101testimonyftcoversight20200805.pdf (last visited Dec. 21, 
2023).
    From 2019 to 2023, the Commission received on average nearly 4 
million Do Not Call complaints per year, and the DNC Registry 
currently has over 249 million active telephone numbers. FTC, Do Not 
Call Data Book 2023 (``2023 DNC Databook''), at 6 (Nov. 2023), 
available at https://www.ftc.gov/system/files/ftc_gov/pdf/Do-Not-Call-Data-Book-2023.pdf (last visited Dec. 11, 2023). By comparison, 
within one year of its launch, the DNC Registry had over 62 million 
active telephone numbers registered, and the Commission received 
over 500,000 Do Not Call complaints. See Annual Report to Congress 
for FY 2003 and 2004 Pursuant to the Do Not Call Implementation Act 
on Implementation of the National Do Not Call Registry, at 3 (Sept. 
2005), available at https://www.ftc.gov/sites/default/files/documents/reports/national-do-not-call-registry-annual-report-congress-fy-2003-and-fy-2004-pursuant-do-not-call/051004dncfy0304.pdf (last visited Dec. 11, 2023); National Do Not 
Call Registry Data Book for Fiscal Year 2009, at 4 (Nov. 2009), 
available at https://www.ftc.gov/sites/default/files/documents/reports_annual/fiscal-year-2009/091208dncadatabook.pdf (last visited 
Dec. 11, 2023). Conversely, technological advancements have also 
reduced the burden and costs of recordkeeping. 2022 NPRM, 87 FR at 
33685 n.95 and 33690-91.
    \30\ See supra note 29. On June 25, 2019, the FTC announced 
``Operation Call it Quits,'' which included 94 actions against 
illegal robocallers, many of which used spoofing technology. See 
Press Release, FTC, Law Enforcement Partners Announce New Crackdown 
on Illegal Robocalls (June 25, 2019), available at https://www.ftc.gov/news-events/press-releases/2019/06/ftc-law-enforcement-partners-announce-new-crackdown-illegal (last visited Dec. 11, 
2023).
    \31\ See supra note 29.
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    The primary hurdles in enforcing the TSR in the current 
telemarketing landscape are in: (1) identifying the telemarketer and 
seller responsible for the telemarketing campaign; (2) obtaining call 
detail records; and (3) linking the content of the telemarketing calls 
with the call detail records to determine which TSR provisions might 
apply to the telemarketing activity.
    As explained in more detail in the 2022 NPRM, to identify the 
responsible parties and obtain evidence of their telemarketing 
activities, the Commission often must issue civil investigative demands 
to multiple voice service providers to trace a call from the consumer 
to the telemarketer's voice provider.\32\ In some instances, by the 
time the Commission has identified the relevant voice provider, the 
voice provider may not have retained records of the telemarketing calls 
such as the date, time, call duration, and disposition of each call, or 
the phone number(s) that placed and received each call (i.e. ``call 
detail records'').\33\ As a result, the call detail records either no 
longer exist or are not available for law

[[Page 26762]]

enforcement purposes, and the Commission cannot identify the bad actor 
responsible for the spoofed or otherwise illegal calls.\34\
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    \32\ 2022 NPRM, 87 FR at 33680-81.
    \33\ Id. at 33680. In other instances, voice providers assert it 
is cost prohibitive to retrieve because they only maintain records 
in an easily retrievable format for several months before archiving 
them in the ordinary course of business.
    \34\ Id.
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    Call detail records are also necessary to ascertain compliance with 
certain provisions of the TSR such as the DNC Registry.\35\ And as 
detailed in the 2022 NPRM, even when the Commission and other law 
enforcers are successful in obtaining call detail records, the records 
alone do not contain sufficient information about the content of the 
calls for regulators to determine whether the telemarketer or seller 
has violated the TSR.\36\
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    \35\ Id. at 33681.
    \36\ Id. at 33680-82.
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    The proposed amendments to the recordkeeping requirements addressed 
the challenges identified above. They included new recordkeeping 
requirements of telemarketing activity that telemarketers or sellers 
are in the best position to provide.\37\ Specifically, the proposed 
amendments required the retention of the following new categories of 
information: (1) a copy of each unique prerecorded message, including 
each call a telemarketer makes using soundboard technology; \38\ (2) 
call detail records of telemarketing campaigns; \39\ (3) records 
sufficient to show a seller has an established business relationship 
(``EBR'') with a consumer; \40\ (4) records sufficient to show a 
consumer is a previous donor to a particular charity; \41\ (5) records 
of the service providers that a telemarketer uses to deliver outbound 
calls; \42\ (6) records of a seller or charitable organization's 
entity-specific do-not-call registries; \43\ and (7) records of the 
Commission's DNC Registry that were used to ensure compliance with this 
Rule.\44\
---------------------------------------------------------------------------

    \37\ Id.
    \38\ Soundboard technology is technology that allows a live 
agent to communicate with a call recipient by playing recorded audio 
snippets instead of using his or her own live voice. See FTC Staff 
Opinion Letter on Soundboard Technology, at 1 (Nov. 10, 2016), 
available at https://www.ftc.gov/system/files/documents/advisory_opinions/letter-lois-greisman-associate-director-division-marketing-practices-michael-bills/161110staffopsoundboarding.pdf 
(last visited Dec. 11, 2023).
    \39\ The proposed amendments stated the call detail records 
include for each call a telemarketer places or receives, the calling 
number; called number; time, date, and duration of the call; and the 
disposition of the call, such as whether the call was answered, 
dropped, transferred, or connected. If the call was transferred, the 
record should also include the phone number or IP address that the 
call was transferred to as well as the company name, if the call was 
transferred to a company different from the seller or telemarketer 
that placed the call. 2022 NPRM, 87 FR at 33684.
    \40\ For each consumer with whom a seller asserts it has an 
established business relationship, the proposed amendments stated a 
seller must keep a record of the name and last known phone number of 
that consumer, the date the consumer submitted an inquiry or 
application regarding that seller's goods or services, and the goods 
or services inquired about. A seller may also show it has an 
established business relationship with a consumer if that consumer 
purchased, rented, or leased the seller's goods or services or had a 
financial transaction with the seller during the 18 months before 
the date of the telemarketing call. Another proposed amendment 
modifies the existing recordkeeping provisions to state that records 
of existing customers should also include the date of the financial 
transaction to establish EBR under these circumstances. Id. at 
33685.
    \41\ If a telemarketer intends to assert that a consumer is a 
previous donor to a particular charity, the Commission proposed that 
for each such consumer the telemarketer must keep a record of that 
consumer's name and last known phone number, and the last date that 
consumer donated to the particular charity. The proposed amendments 
also included a new definition of ``previous donor.'' Id. at 33685.
    \42\ The proposed amendments stated that service providers 
include, but are not limited to, voice providers, autodialers, sub-
contracting telemarketers, or soundboard technology platforms. The 
Commission did not intend for this provision to include every voice 
provider involved in delivering the outbound call and limited this 
provision to the service providers with which the seller or 
telemarketer has a business relationship. For each such entity, the 
seller or telemarketer must keep records of any applicable 
contracts, the date the contract was signed, and the time period the 
contract is in effect. The proposed amendments also stated that the 
records should be retained for five years after the contract expires 
or five years from the date the telemarketing activity covered by 
the contract ceases, whichever is shorter. Id. at 33685-86.
    \43\ For the entity-specific do-not-call registry, the 
Commission proposed requiring telemarketers and sellers to retain 
records of: (1) the consumer's name, (2) the phone number(s) 
associated with the DNC request, (3) the seller or charitable 
organization from which the consumer does not wish to receive calls, 
(4) the telemarketer that made the call; (5) the date the DNC 
request was made; and (6) the good or service being offered for sale 
or the charitable purpose for which contributions are being 
solicited. Id. at 33686.
    \44\ The Commission proposed requiring telemarketers or sellers 
to keep records of every version of the FTC's DNC Registry the 
telemarketer or seller downloaded to ensure compliance with the TSR. 
Id. at 33686.
---------------------------------------------------------------------------

    The proposed amendments also required the retention of other new 
records that help identify the nature and purpose of each call 
including: (1) the identity of the telemarketer who placed or received 
each call; (2) the seller or charitable organization for which the 
telemarketing call is placed or received; (3) the good, service, or 
charitable purpose that is the subject of the call; (4) whether the 
call is to a consumer or business, utilizes robocalls, or is an 
outbound call; and (5) the telemarketing script(s) and the robocall 
recording (if applicable) that was used in the call.\45\ The proposed 
amendments also required the retention of records regarding the caller 
ID transmitted if the call was an outbound call, including the name and 
phone number that was transmitted, and records of the telemarketer's 
authorization to use the phone number and name that was 
transmitted.\46\
---------------------------------------------------------------------------

    \45\ Id. at 33684.
    \46\ Id.
---------------------------------------------------------------------------

    The proposed amendments also modified or clarified existing 
recordkeeping requirements to delineate more clearly the information 
telemarketers or sellers must keep to comply with those provisions, and 
specified what information is required to assert an exemption or 
affirmative defense to the TSR.\47\ Specifically, the proposed 
amendments modified the recordkeeping provisions to require retention 
of a customer or prize recipient's last known telephone number and last 
known physical or email address, and the date a customer bought a good 
or service.\48\ It modified the time period to keep records from two 
years to five years from the date the record is made, except for 
advertising materials under Section 310.5(a)(1) and service contracts 
under Section 310.5(a)(9), which require retention of records for five 
years from the date the records under those sections are no longer in 
use.\49\
---------------------------------------------------------------------------

    \47\ Id. at 33680-82.
    \48\ Id. at 33686.
    \49\ Id.
---------------------------------------------------------------------------

    The proposed amendments clarified that records of verifiable 
authorizations, express informed consent or express agreement 
(collectively, ``consent'') include a consumer's name and phone number, 
a copy of the consent requested in the same manner and format that it 
was presented to that consumer, a copy of the consent provided, the 
date the consumer provided consent, and the purpose for which consent 
was given and received.\50\ The NPRM also proposed that if the 
telemarketer or seller requested consent verbally, the copy of consent 
requested did not require a recording of the conversation. A copy of 
the telemarketing script would suffice as a complete record of the 
consent requested. But the NPRM made clear that this proposal only 
applies to telemarketing calls where no other provision of the TSR 
requires a recording of consent.\51\
---------------------------------------------------------------------------

    \50\ Id. at 33686-87. The proposed amendment also stated that 
for a copy of the consent provided under Sections 310.3(a)(3), 
310.4(a)(7), 310.4(b)(1)(iii)(B)(1), or 310.4(b)(1)(v)(A), a 
complete record must include all of the requirements outlined in 
those respective sections.
    \51\ 2022 NPRM, 87 FR at 33686-87.
---------------------------------------------------------------------------

    The proposed amendments also included new format requirements for 
records containing a phone number, time or call duration; \52\ 
clarified that a

[[Page 26763]]

failure to keep each record required under Section 310.5 in a complete 
and accurate manner constitutes a violation of the TSR; and created a 
safe harbor for incomplete or inaccurate call detail records where the 
omission was temporary and inadvertent.\53\ Finally, the Commission 
proposed modifying the compliance obligations in Section 310.5(e) to 
obligate both telemarketers and sellers to keep records if they fail to 
allocate recordkeeping obligations between themselves.\54\
---------------------------------------------------------------------------

    \52\ The proposed amendments required records containing 
international phone numbers to comport with International 
Telecommunications Union's Recommendation E.164 format and domestic 
numbers to comport with the North American Numbering plan. The 
Commission proposed that records containing time and call duration 
be kept to the closest whole second, and time must be recorded in 
Coordinated Universal Time (UTC). Id. at 33687.
    \53\ The Commission proposed a safe harbor for temporary and 
inadvertent errors in keeping call detail records if the 
telemarketer or seller can demonstrate that: (1) it has established 
and implemented procedures to ensure completeness and accuracy of 
its records under Section 310.5(a)(2); (2) it trained its personnel 
in the procedures; (3) it monitors compliance and enforces the 
procedures, and documents its monitoring and enforcement activities; 
and (4) any failure to keep accurate or complete records under 
Section 310.5(a)(2) was temporary and inadvertent. Id. at 33687.
    \54\ Id. at 33687.
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B. B2B Telemarketing

    The Original TSR exempted B2B calls other than those selling office 
and cleaning supplies, which the Commission considered the ``most 
significant business-to-business problem area'' at the time.\55\ The 
Commission stated, however, it would reconsider the B2B exemption if 
``additional [B2B] telemarking activities become problems.'' \56\ In 
2003, the Commission reconsidered the scope of the B2B exemption and 
proposed requiring B2B calls selling internet or web services to comply 
with the TSR because they had become an emerging area for fraud.\57\ 
The Commission ultimately decided not to modify the B2B exemption 
because the Commission wanted to ``move cautiously so as not to chill 
innovation in the development of cost-efficient methods for small 
businesses to join in the internet marketing revolution.'' \58\ But the 
Commission again noted it would ``continue to monitor closely'' the B2B 
telemarketing practices in this area and ``may revisit the issue in 
subsequent Rule Reviews should circumstances warrant.'' \59\
---------------------------------------------------------------------------

    \55\ Original TSR, 60 FR at 43861.
    \56\ Id.; see also 2002 Notice of Proposed Rulemaking (``2002 
NPRM''), 67 FR 4492, 4500 (Jan. 30, 2002); 2014 TSR Rule Review, 79 
FR at 46738.
    \57\ 2002 NPRM, 67 FR at 4500, 4531. ``internet Services'' meant 
any service that allowed a business to access the internet, 
including internet service providers, providers of software and 
telephone or cable connections, as well as services that provide 
access to email, file transfers, websites, and newsgroups. Id. ``Web 
services'' was defined as ``designing, building, creating, 
publishing, maintaining, providing, or hosting a website on the 
internet.'' Id. The Commission intended for the term internet 
services to encompass any and all services related to accessing the 
internet and the term web services to encompass any and all services 
related to operating a website. Id.
    \58\ 2003 TSR Amendments, 68 FR at 4663.
    \59\ Id.
---------------------------------------------------------------------------

    Since 2003, the Commission has continued to see small business 
harmed by numerous types of deceptive B2B telemarketing schemes,\60\ 
including those selling business directory listings,\61\ web hosting or 
design services,\62\ search engine optimization services,\63\ market-
specific advertising opportunities,\64\ payment processing 
services,\65\ and schemes that impersonate the government.\66\ For 
example, some of these schemes were the subject of a coordinated FTC-
led crackdown on scams targeting small businesses, called ``Operation 
Main Street,'' announced in June 2018.\67\
---------------------------------------------------------------------------

    \60\ A 2018 survey conducted by the Better Business Bureau 
revealed that the same scams that harm consumers, such as tech 
support scams and imposter scams, also harm small businesses, and 
that 57% of scams that impact small businesses are perpetrated 
through telemarketing. Better Business Bureau, Scams and Your Small 
Business Research Report, at 9-10 (June 2018), available at https://www.bbb.org/SmallBizScams (last visited Dec. 11, 2023).
    \61\ See, e.g., FTC v. Your Yellow Book Inc., No. 14-cv-786-D 
(W.D. Ok. July 24, 2014), available at https://www.ftc.gov/system/files/documents/cases/140807youryellowbookcmpt.pdf (last visited 
Dec. 11, 2023); FTC v. OnlineYellowPagesToday.com, Inc., No. 14-cv-
0838 RAJ (W.D. Wash. June 9, 2014), available at https://www.ftc.gov/system/files/documents/cases/140717onlineyellowpagescmpt.pdf (last visited Dec. 11, 2023); FTC v. 
Modern Tech. Inc., et al., No. 13-cv-8257 (Nov. 18, 2013) available 
at https://www.ftc.gov/sites/default/files/documents/cases/131119yellowpagescmpt.pdf (last visited Dec. 11, 2023); FTC v. 
6555381 Canada Inc. d/b/a Reed Publishing, No. 09-cv-3158 (N.D. Ill. 
May 27, 2009) available at https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602reedcmpt.pdf (last visited Dec. 11, 
2023); FTC v. 6654916 Canada Inc. d/b/a Nat'l. Yellow Pages Online, 
Inc., No. 09-cv-3159 (N.D. Ill. May 27, 2009), available at https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602nypocmpt.pdf (last visited Dec. 11, 2023); FTC v. Integration 
Media, Inc., No. 09-cv-3160 (N.D. Ill. May 27, 2009), available at 
https://www.ftc.gov/sites/default/files/documents/cases/2009/06/090602goamcmpt.pdf (last visited Dec. 11, 2023); FTC v. Datacom 
Mktg. Inc., et al., No. 06-cv-2574 (N.D. Ill. May 9, 2006), 
available at https://www.ftc.gov/sites/default/files/documents/cases/2006/05/060509datacomcomplaint.pdf (last visited Dec. 11, 
2023); FTC v. Datatech Commc'ns, Inc., No. 03-cv-6249 (N.D. Ill. 
Aug. 3, 2005) (filing amended complaint), available at https://www.ftc.gov/sites/default/files/documents/cases/2005/08/050825compdatatech.pdf (last visited Dec. 11, 2023); FTC v. Ambus 
Registry, Inc., No. 03-cv-1294 RBL (W.D. Wash. June 16, 2003), 
available at https://www.ftc.gov/sites/default/files/documents/cases/2003/07/ambuscomp.pdf (last visited Dec. 11, 2023).
    \62\ See FTC v. Epixtar Corp., et al., No. 03-cv-8511(DAB) 
(S.D.N.Y. Nov. 3, 2003), available at https://www.ftc.gov/sites/default/files/documents/cases/2003/11/031103comp0323124.pdf (last 
visited Dec. 11, 2023); FTC v. Mercury Mktg. of Del., Inc., No. 00-
cv-3281 (E.D. Pa. Aug. 12, 2003) (filing for an Order to Show Cause 
Why Defendants Should Not be Held in Contempt), available at https://www.ftc.gov/sites/default/files/documents/cases/2003/08/030812contempmercurymarketing.pdf (last visited Dec. 11, 2023).
    \63\ See, e.g., FTC v. Pointbreak Media, LLC, No. 18-cv-61017-
CMA (S.D. Fla. May 7, 2018), available at https://www.ftc.gov/system/files/documents/cases/matter_1723182_pointbreak_complaint.pdf 
(last visited Dec. 11, 2023); FTC v. 7051620 Canada, Inc. No. 14-cv-
22132 (S.D. Fla. June 9, 2014), available at https://www.ftc.gov/system/files/documents/cases/140717nationalbusadcmpt.pdf (last 
visited Dec. 11, 2023).
    \64\ See, e.g., FTC v. Prod. Media Co., No. 20-cv-00143-BR (D. 
Or. Jan. 23, 2020), available at https://www.ftc.gov/system/files/documents/cases/production_media_complaint.pdf (last visited Dec. 
11, 2023).
    \65\ See, e.g., FTC v. First Am. Payment Sys., LP, et al., No. 
4:22-cv-00654 (E.D. Tex. July 29, 2022), available at https://www.ftc.gov/system/files/ftc_gov/pdf/Complaint%20%28file%20stamped%29_0.pdf (last visited Dec. 11, 2023).
    \66\ See, e.g., FTC v. DOTAuthority.com, No. 16-cv-62186 (S.D. 
Fla. Sept. 13, 2016) available at https://www.ftc.gov/system/files/documents/cases/162017dotauthoriity-cmpt.pdf (last visited Dec. 11, 
2023); FTC v. D & S Mktg. Sols. LLC, No. 16-cv-01435-MSS-AAS (M.D. 
Fla. June 6, 2016), available at https://www.ftc.gov/system/files/documents/cases/160621dsmarketingcmpt.pdf (last visited Dec. 11, 
2023).
    \67\ See Press Release, FTC, BBB, and Law Enforcement Partners 
Announce Results of Operation Main Street: Stopping Small Business 
Scams Law Enforcement and Education Initiative (June 18, 2018), 
available at https://www.ftc.gov/news-events/press-releases/2018/06/ftc-bbb-law-enforcement-partners-announce-results-operation-main 
(last visited Dec. 11, 2023).
---------------------------------------------------------------------------

    To address these scams, the 2022 NPRM proposed applying the TSR's 
prohibitions against misrepresentations, as articulated in Sections 
310.3(a)(2) and 310.3(a)(4), to B2B telemarketing. Specifically, 
sellers and telemarketers would be prohibited from making: (1) several 
types of material misrepresentations in the sale of goods or services; 
and (2) false or misleading statements to induce a person to pay for 
goods or services or to induce a charitable contribution (collectively, 
``misrepresentations'').\68\ The 2022 NPRM did not propose applying any 
other provisions of the TSR to B2B calls, such as recordkeeping, DNC 
Registry, or DNC fee access requirements.\69\
---------------------------------------------------------------------------

    \68\ 2022 NPRM, 87 FR at 33682-84.
    \69\ Id.; see also 16 CFR 310.5 (recordkeeping requirements); 
310.8 (fee for access to the Do Not Call Registry).
---------------------------------------------------------------------------

C. New Definition for ``Previous Donor''

    The 2022 NPRM proposed adding a new definition for the term 
``previous donor'' to clarify that telemarketers are prohibited from 
making charity robocalls unless the consumer donated to the soliciting 
charity within the last two years. When the Commission amended the TSR 
to prohibit robocalls

[[Page 26764]]

in 2008,\70\ it included a narrow exemption allowing charity robocalls 
to prior donors, recognizing a charity's strong interest in reaching 
consumers with ``whom the charity has an existing relationship--i.e. 
members of, or previous donors to[,] the non-profit organization on 
whose behalf the calls are made.'' \71\ The Commission meant to limit 
the exemption to consumers with actual relationships to the soliciting 
organization, because allowing ``telefunders to make impersonal 
prerecorded cold calls on behalf of charities that have no prior 
relationship with the call recipients . . . would defeat the 
amendment's purpose of protecting consumers' privacy.'' \72\ But in 
creating the exemption, the Commission did not update the definition of 
``donor'' or include a definition of ``previous donor.'' Because 
``donor'' is defined as ``any person solicited to make a charitable 
contribution,'' \73\ the Commission's 2008 Amendment could be 
misinterpreted as allowing a telemarketer to send robocalls to any 
consumer it had previously solicited for a donation on behalf of a 
charity, regardless of whether the consumer donated to or has an 
existing relationship with that charity.
---------------------------------------------------------------------------

    \70\ 2008 TSR Amendments, 73 FR at 51164.
    \71\ Id. at 51193.
    \72\ Id. at 51194.
    \73\ 16 CFR 310.2(p). The Commission declined to limit the 
definition of donor to those who have ``an established business 
relationship with the non-profit charitable organization'' because 
it wanted the term ``[to] encompass not only those who have agreed 
to make a charitable contribution but also any person who is 
solicited to do so, to be consistent with [the Rule's] use of the 
term `customer.' '' 2003 TSR Amendments 68 FR at 4590.
---------------------------------------------------------------------------

    Adding a definition for ``previous donor'' makes clear a seller or 
telemarketer may only make charity robocalls to a donor who has 
previously provided a charitable contribution to that particular 
charity within the last two years.\74\
---------------------------------------------------------------------------

    \74\ The Commission proposed that the definition of ``previous 
donor'' be limited to those who donated to a charity within the past 
two years so that consumers will not receive robocalls in perpetuity 
from organizations to which they have donated. The Commission chose 
two years to account for the possibility that consumers who donate 
annually may not necessarily donate exactly one year apart. 2022 
NPRM, 87 FR at 33688.
---------------------------------------------------------------------------

D. Overview of Public Comments Received in Response to the 2022 NPRM

    In response to the 2022 NPRM,\75\ the Commission received 26 
comments \76\ representing the views of State governments,\77\ consumer 
groups,\78\ consumers,\79\ industry trade associations,\80\ and 
businesses.\81\ The vast majority of the comments focused on the 
proposed recordkeeping amendments. Commenters on behalf of government, 
individual consumers, and consumer advocacy groups generally supported 
amending the recordkeeping requirements but also submitted suggestions 
for additional amendments.\82\ Industry groups and businesses had mixed 
comments. Some commenters did not support any recordkeeping amendments, 
citing the burden they would impose, while others were generally 
supportive or supportive of specific proposed amendments.\83\
---------------------------------------------------------------------------

    \75\ The Commission also received 114 unique comments in 
response to the 2014 Rule Review reflecting the opinions of State 
and Federal agencies, consumer advocacy groups, consumers, 
academics, and industry. 2022 ANPR, 87 FR at 33664. The comments 
addressing whether the Commission should amend the TSR's 
recordkeeping provisions are summarized in the 2022 NPRM. 2022 NPRM, 
87 FR at 33682.
    \76\ Many commenters filed one comment in response to the 2022 
ANPR or 2022 NPRM that addressed issues raised by both documents. 
Comments regarding the proposals in the 2022 NPRM will be addressed 
in this Final Rule. Comments regarding the proposals in the 2022 
ANPR will be addressed in the Notice of Proposed Rulemaking that the 
Commission is issuing concurrently with this Final Rule (``2024 
NPRM''). We cite public comments by name of the commenting 
organization or individual, the rulemaking (ANPR comments were 
assigned ``33'' and the NPRM comments were assigned ``34''), and the 
comment number. All comments submitted can be found at 
www.regulations.gov.
    \77\ National Association of Attorneys General on behalf of 43 
State Attorneys General (``NAAG'') 34-20.
    \78\ World Privacy Forum (``WPF'') 34-21; Electronic Privacy and 
Information Center, National Consumer Law Center (on behalf of its 
low-income clients), Center for Digital Democracy, Consumer Action, 
Consumer Federation of America, FoolProof, Mountain State Justice, 
New Jersey Citizen Action, Patient Privacy Rights, Public Good Law 
Center, Public Knowledge, South Carolina Appleseed Legal Justice 
Center, and Cathy Lesser Mansfield (Senior Instructor in Law at Case 
Western Reserve University School of Law) (``EPIC'') 34-23.
    \79\ Bradley 34-15; Cassady 34-2; Chen 34-9; Kreutzmann 34-5, 
Yang 34-12, and 4 Anonymous submitters at 34-3, 34-4, 34-7, and 34-
11. Four commenters submitted consumer complaints or were not 
relevant to the proceeding. See Anonymous 34-6, 34-8, and 34-16; and 
Grener 34-10.
    \80\ Enterprise Communications Advocacy Coalition (``ECAC'') 34-
22; National Federation of Independent Business 33-4 (``NFIB''); 
Ohio Credit Union League (``OCUL'') 34-19; Professional Association 
for Customer Engagement 33-15 (``PACE''); Revenue Based Finance 
Coalition(``RBFC'') 34-13; Third Party Payment Processors 
Association (``TPPPA'') 34-14; US Chamber of Commerce (``Chamber'') 
34-24; and USTelecom--The Broadband Association (``USTelecom'') 33-
14.
    \81\ Rapid Financial Services, LLC and Small Business Financial 
Solutions, LLC (``Rapid Finance'') 34-17; Sirius XM Radio 
(``Sirius'') 34-18.
    \82\ Many of the consumer comments generally stated that they 
supported the recordkeeping amendments because they would help 
protect consumers from deceptive telemarketing and with enforcing 
the TSR. See, e.g., Cassady 34-3; Chen 34-9; and Anonymous 34-11 and 
34-3. One commenter generally urged more enforcement and larger 
penalties. Kowalski 33-7.
    \83\ One anonymous commenter did not support any recordkeeping 
because it required collection of too much data, which the commenter 
believed infringed on a consumer's privacy. Anonymous 34-4.
---------------------------------------------------------------------------

    Similarly, industry groups and businesses did not support applying 
the TSR's prohibitions against deceptive telemarketing to B2B calls; 
while government, individual consumers, and consumer organizations were 
supportive. Only three comments touched on the proposed amendment to 
add a new definition of ``previous donor.'' The comments and the basis 
for the Commission's adoption or rejection of the commenters' suggested 
modifications to the proposed amendments are analyzed in Section III 
below.

III. Final Amended Rule

    The Commission has carefully reviewed and analyzed the record 
developed in this proceeding.\84\ The record, which includes the 
Commission's law enforcement experience and that of its State and 
Federal counterparts, support the Commission's view the proposed 
amendments in the 2022 NPRM are necessary and appropriate to protect 
consumers, including small businesses, from deceptive or abusive 
telemarketing practices and ensure the Commission and other regulators 
can effectively and efficiently enforce the TSR.\85\
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    \84\ The record includes the 2014 Rule Review, the 2022 NPRM, 
2022 ANPR, and the law enforcement cases and experience referenced 
therein, which are hereby incorporated by reference.
    \85\ The Commission's decision to amend the Rule is made 
pursuant to the rulemaking authority granted by the Telemarketing 
Act to protect consumers, including small businesses, from deceptive 
or abusive practices. 15 U.S.C. 6102(a).
---------------------------------------------------------------------------

    The Final Rule requires sellers and telemarketers to keep 
additional records of their telemarketing activities, prohibits 
misrepresentations in B2B telemarketing, and adds a new definition for 
previous donor. The Final Rule also implements several other clerical 
modifications as originally proposed in the 2022 NPRM.\86\
---------------------------------------------------------------------------

    \86\ 2022 NPRM, 87 FR at 33688.
---------------------------------------------------------------------------

    In some instances, the Commission has clarified or made 
modifications to its original proposal in response to the public 
comments submitted. The

[[Page 26765]]

Commission otherwise adopts the amendments proposed in the 2022 NPRM as 
set forth in Section VII--Congressional Review Act (``Final Rule'') 
below. The primary modifications and clarifications between the 
proposed rule published in the 2022 NPRM and the Final Rule are:
     The term ``prerecorded message'' includes telemarketing 
calls made using ``digital soundboard'' rather than ``soundboard 
technology'' to make clear the term includes any digital or sound 
technologies that sellers or telemarketers use to convey a verbal 
message to a consumer in telemarketing;
     Telemarketers and sellers will have one hundred and eighty 
days after the Final Rule is published to implement any new systems, 
software, or procedures necessary to comply with the new requirement 
that they keep call detail records under Section 310.5(a)(2);
     Sellers and telemarketers need not retain records of the 
calling number, called number, date, time, duration, and disposition of 
telemarketing calls under Sections 310.5(a)(2)(vii) and (x) for any 
calls made by an individual telemarketer who manually enters a single 
telephone number to initiate a call to that telephone number. Such 
sellers and telemarketers, however, must still comply with the other 
requirements under Section 310.5(a)(2);
     Modified Section 310.4(b)(2) to state it is also an 
abusive telemarketing act or practice and a violation of the TSR for 
any person to sell, rent, lease, purchase, or use any list established 
to comply with the TSR's recordkeeping requirements under Section 
310.5. This modification makes clear telemarketers and sellers cannot 
use any consumer lists created for recordkeeping purposes for any other 
purpose;
     In obtaining written consent to contact a consumer using 
robocalls on behalf of a ``specific seller,'' the written agreement 
must identify the ``specific seller'' by its legal entity name to make 
clear that any agreement to receive robocalls is limited to that legal 
entity. The seller or telemarketer obtaining consent from the consumer 
must ensure the consumer understands which legal entity they have 
authorized to send robocalls;
     Where no provision of the TSR requires a recording of the 
call, the Final Rule modifies what was proposed in the NPRM and now 
states a complete record of consent that is verbally requested must 
include a recording of the consent requested as well as the consent 
provided, and that recording must make clear the purpose for which 
consent was provided;
     Service providers referenced under Section 310.5(a)(9) 
include any entity that provides ``digital soundboard'' technology 
rather than ``soundboard technology platforms'' to make clear sellers 
and telemarketers must retain records of any entity that provides any 
digital or sound technologies sellers or telemarketers use to convey a 
verbal message to a consumer in telemarketing;
     Sellers and telemarketers must retain records of their 
service providers under Section 310.5(a)(9) for five years from the 
date the contract expires;
     For records of the entity-specific DNC list under Section 
310.5(a)(10), sellers and telemarketers must retain a record of the 
telemarketing entity that made the call and not the individual 
telemarketer;
     Under Section 310.5(a)(11), sellers and telemarketers need 
only retain records of which version of the FTC DNC Registry they used 
to comply with the TSR rather than the version itself. A record of 
which version used includes: (1) the name of the entity which accessed 
the registry; (2) the date the DNC Registry was accessed; (3) the 
subscription account number that was used to access the registry; and 
(4) the telemarketing campaign(s) for which it was accessed;
     The new formatting requirements under Section 310.5(b) 
apply to new records created after the Final Rule goes into effect;
     The safe harbor to retain call detail records under 
Section 310.5(a)(2) will grant sellers and telemarketers thirty days to 
correct any inadvertent errors from the date of discovery, if the 
seller or telemarketer who made the error otherwise complies with the 
other provisions of the safe harbor; and
     Under Section 310.5(e), sellers who delegate recordkeeping 
responsibilities to a telemarketer must also retain access rights to 
those records so the seller can produce responsive records in the event 
it has hired a telemarketer overseas.

A. Recordkeeping Requirements

    The Final Rule requires sellers and telemarketers to maintain 
additional records that, in the Commission's law enforcement 
experience, are difficult for the Commission to obtain but are 
necessary to ensure compliance with the TSR.\87\ The Final Rule also 
clearly defines the information telemarketers or sellers must retain to 
comply with existing provisions and specifies the records needed to 
assert an exemption or affirmative defense to the TSR. In this section, 
the Commission details the public comments it received in response to 
each proposed amendment to the recordkeeping requirements, and the 
Commission's response.
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    \87\ The Telemarketing Act authorizes the Commission to include 
recordkeeping requirements in the Rule. 15 U.S.C. 6102(a)(3).
---------------------------------------------------------------------------

1. Section 310.5(a)(1)--Substantially Different Advertising Materials 
and Each Unique Prerecorded Message
    Section 310.5(a)(1) currently requires sellers and telemarketers to 
keep records of ``all substantially different advertising, brochures, 
telemarketing scripts, and promotional materials.'' The 2022 NPRM 
proposed modifying Section 310.5(a)(1) to require retention of a copy 
of each unique robocall, including each call a telemarketer makes using 
soundboard technology.\88\
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    \88\ The 2022 NPRM also proposed changing the records retention 
period under this provision from two years to five years from the 
date that the records are no longer in use. See infra Section 
III.A.10 (Time Period to Keep Records).
---------------------------------------------------------------------------

    The Commission received five public comments addressing this 
proposal. The Enterprise Communications Advocacy Coalition (``ECAC'') 
and Sirius XM Radio (``Sirius'') object to this proposed amendment, 
stating it would be overly burdensome. Sirius states requiring the 
retention of each unique robocall would ``generate massive amounts of 
data that then needs to be searched, analyzed, secured, and retained, 
and will be extremely burdensome.'' \89\ ECAC claims robocalls are 
``typically stored as .wav files that are significantly larger than 
text files. While storage costs may have decreased over time, the 
expense associated with the storage of these large .wav files will be a 
significant burden on lawful telemarketers.'' \90\
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    \89\ Sirius 34-18 at 8.
    \90\ ECAC 34-22 at 2.
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    The National Association of Attorneys General (on behalf of 43 
State Attorneys General) (``NAAG''), Professional Association for 
Customer Engagement (``PACE''), and World Privacy Forum (``WPF'') all 
state they generally support this amendment.\91\ PACE further states 
their members ``often keep copies of [each unique robocall] despite the 
TSR currently not requiring businesses to do so. Retaining these 
records will protect American consumers, who receive countless 
prerecorded messages, and protect companies, who will be able to prove 
compliance with the TSR.'' \92\
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    \91\ NAAG 34-20 at 3-4; PACE 33-15 at 2; WPF 34-21 at 2.
    \92\ PACE 33-15 at 2.
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    The Commission is not persuaded by ECAC's and Sirius' arguments. In 
the Commission's experience, robocalls are typically of short duration 
and the file sizes are minimal. As ECAC notes, the cost of storage may 
be decreasing every

[[Page 26766]]

year. Moreover, the Commission proposed requiring a copy of each unique 
robocall, not every robocall used. Finally, as some commenters have 
stated,\93\ businesses typically keep these records in the ordinary 
course of business. In the FTC's law enforcement experience, records of 
each unique prerecorded message are necessary for the Commission to 
ensure compliance with the TSR, and requiring retention of each unique 
robocall should not impose an undue burden.
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    \93\ See, e.g., PACE 33-15 at 2.
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    With respect to calls utilizing soundboard technology, the 
Commission sought comment on the burden that may be imposed by 
requiring sellers or telemarketers to keep each unique prerecorded 
message involving the use of soundboard technology, including how many 
telemarketers employ soundboard technology in telemarketing, how many 
calls they make using soundboard technology, the average duration of 
each call, and whether the telemarketer typically keeps recordings of 
such calls in the ordinary course of business.\94\ The FTC's law 
enforcement experience demonstrates the use of soundboard technology is 
ongoing. The Commission did not receive any public comments regarding 
this issue. WPF did note, however, the Commission should be mindful of 
using technological language that is broad enough to encompass a 
variety of digital and other sound technologies and recommended the use 
of the term ``digital soundboard'' in lieu of ``soundboard 
technology.'' \95\ In light of this recommendation, the Commission 
states that the term ``prerecorded message'' includes telemarketing 
calls made using ``digital soundboard'' rather than ``soundboard 
technology'' to make clear the term includes any digital or sound 
technologies that sellers or telemarketers use to convey a verbal 
message to a consumer in telemarketing. Some digital soundboard 
technologies allow a seller or telemarketer to mimic or clone the voice 
of a specific individual and calls using this technology would be 
subject to this provision of the TSR to the extent that the mimic or 
cloning creates a prerecorded message that is used in telemarketing.
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    \94\ 2022 NPRM, 87 FR at 33689.
    \95\ WPF 34-21 at 2.
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    WPF also ``encourage[s] the FTC to require telemarketers to keep a 
copy of the full range of materials involved in the advertising 
campaign, including transcripts.'' \96\ The Commission notes the TSR's 
recordkeeping provisions already require telemarketers and sellers to 
retain a copy of each substantially different advertising, brochure, 
telemarketing script, and promotional material.\97\ The 2022 NPRM 
simply clarified telemarketing scripts include robocall and upsell 
scripts, and the failure to keep one substantially different version of 
each record under Section 310.5(a)(1) is a violation of the TSR.\98\
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    \96\ Id.
    \97\ 16 CFR 310.5(a)(1).
    \98\ 2022 NPRM, 87 FR at 33684.
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2. Section 310.5(a)(2)--Call Detail Records
    The 2022 NPRM proposed adding Section 310.5(a)(2) to require 
retention of call detail records, including, for each call a 
telemarketer places or receives: the calling number; called number; 
time, date, and duration of the call; and the disposition of the call, 
such as whether the call was answered, dropped, transferred, or 
connected. For transfers, the record included the phone number or IP 
address the call was transferred to and the company name, if 
transferred to a company different from the seller or telemarketer that 
placed the call. The 2022 NPRM also required the retention of other 
records regarding the nature and purpose of each call including: (1) 
the telemarketer who placed or received each call; (2) the seller or 
charity for which the telemarketing call is placed or received; (3) the 
good, service, or charitable purpose that is the subject of the call; 
(4) whether the call is to a consumer or business, utilizes robocalls, 
or is an outbound call; and (5) the telemarketing script(s) and 
robocall (if applicable) that was used in the call. Finally, the 2022 
NPRM required retention of records regarding the caller ID transmitted 
for outbound calls, including the name and phone number transmitted, 
and records of the telemarketer's authorization to use that phone 
number and name.
    The Commission received eight comments regarding this proposal. 
ECAC,\99\ the National Federation of Independent Businesses 
(``NFIB''),\100\ and Sirius \101\ objected, stating that compliance 
with this provision would impose enormous expense on businesses engaged 
in lawful telemarketing.\102\ ECAC states its members ``make hundreds 
of millions of calls each year'' and ``[f]actoring in the size of a CDR 
file'' multiplied by the number of calls its members make each year, 
``the expense associated with this retention . . . would be massive.'' 
\103\ ECAC also argues that, while its members likely keep information 
regarding the nature and purpose of the calls in the ordinary course of 
business, associating particular scripts with a particular call is 
unworkable because ``well-trained telemarketers are able to deviate 
from scripts or not use them at all'' and ``scripts are constantly 
changing and evolving to reflect consumer questions and concerns.'' 
\104\
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    \99\ ECAC 34-22 at 3.
    \100\ NFIB 33-4 at 4-5.
    \101\ Sirius 34-18 at 7.
    \102\ OCUL also generally objects to the proposed recordkeeping 
requirements as overly burdensome, stating it would require a 
significant investment to collect and retain new data points in a 
constricted time frame. OCUL 34-19 at 2.
    Other commenters generally objected to the recordkeeping 
amendments, arguing that they require telemarketers and sellers to 
retain more information than they would in the ordinary course of 
business and are ``contrary to data minimization principles'' 
articulated by the Commission elsewhere. See, e.g., Sirius 34-18 at 
2, 4-6; NFIB 33-4 at 3-4. The Commission interprets these arguments 
to refer to the new requirement that sellers and telemarketers 
retain call detail records. NFIB lists other categories in their 
comment as examples of burden, such as records of established 
business relationships, customer lists, consent, and entity-specific 
DNCs or versions of the FTC's DNC Registry. NFIB 33-4 at 3-4. None 
of these categories, however, is new, and the TSR has always 
required telemarketers and sellers to keep these records. See, e.g., 
16 CFR 310.5(a)(3) and (5) (requiring records of consent and 
customer lists); 310.4(b)(3)(iii) and (iv) (requiring records of an 
entity-specific DNC or a version of the FTC's DNC Registry that a 
seller or telemarketer used to qualify for the safe harbor 
provisions); see also 2015 TSR Amendments, 80 FR at 77554 (stating 
the seller or telemarketer bears the burden of demonstrating the 
seller has an existing relationship with a customer whose number is 
on the DNC).
    The Commission notes that the call detail records primarily 
reflect sellers' and telemarketers' business practices rather than 
implicate any consumer information. The only new items of consumer 
information that sellers and telemarketers are required to retain 
under the new recordkeeping amendments are a consumer's phone number 
and the option to retain the consumer's last known email address 
rather than a physical address. See proposed amendments under 
Sections 310.5(a)(2) (call detail records); (a)(3) (prize 
recipients); (a)(4) (customer records); and (a)(6) (previous donor). 
As explained in the 2022 NPRM, the Commission believes that 
telemarketers and sellers likely retain this information in the 
ordinary course of business. 2022 NPRM, 87 FR at 33684-85. 
Furthermore, they must already retain consumers' phone numbers to 
comply with the entity-specific DNC requirements. As discussed in 
additional detail in Section III.A.3--Prize Recipients and Customer 
Records, the Commission will prohibit use of any records created to 
comply with the TSR's recordkeeping requirements for any other 
purpose.
    \103\ ECAC 34-22 at 3.
    \104\ Id. at 4. The Commission does not find ECAC's argument 
persuasive. Even if a telemarketer deviates from a script, fails to 
use the script, or the company constantly updates the scripts, there 
is still a script associated with a particular call and in the 
Commission's law enforcement experience, telemarketers typically 
retain that information in the ordinary course of business.
---------------------------------------------------------------------------

    Sirius argues the Commission's ``overly prescriptive'' approach 
would impair a business's ability to adapt to

[[Page 26767]]

changing market conditions and a company's ability to innovate. It 
would also impose ``significant administrative burdens'' and 
``substantial transactional costs'' on sellers and telemarketers to 
establish contracts and systems to capture the information 
requested.\105\ And NFIB argues sellers and telemarketers would ``incur 
substantial costs to: (1) establish in-house, or purchase from others, 
systems designed and built to accomplish the newly-mandated, 
extraordinarily-detailed recordkeeping, and (2) employ personnel to 
maintain and operate the systems.'' \106\ At minimum, Sirius requests 
the Commission allow a ``phase-in'' period of a few years to allow 
companies sufficient time to adjust agreements, implement new systems, 
and build compliance plans.\107\
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    \105\ Sirius 34-18 at 7-8.
    \106\ NFIB 33-4 at 5.
    \107\ Sirius 34-18 at 8.
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    The Electronic Privacy and Information Center (on behalf of 13 
advocacy groups) (``EPIC''), NAAG, WPF, and an individual consumer, all 
support the proposed amendments.\108\ NAAG echoed the Commission's law 
enforcement experience and agreed the amendments are necessary to 
ensure compliance with the TSR and should not be overly burdensome to 
create and maintain these records.\109\ EPIC stated they ``strongly 
support'' the amendment which rectifies ``a major weakness in the 
existing rule'' of requiring retention of only ``prizes awarded and 
sales'' which are of ``little use in identifying violations of the do-
not-call rule'' without accompanying records of calls.\110\ EPIC 
particularly applauded the amendment requiring retention of any caller 
ID information transmitted and the telemarketer's authorization to use 
that caller ID because spoofing has undermined consumers' faith in the 
U.S. telecommunication system, making it harder for emergency calls to 
reach consumers.\111\ WPF and NAAG also commented that requiring 
records of call transfers and the identity of the recipient of those 
transfers is particularly important because it is ``otherwise 
impossible to trace fraudulent activity'' when transfers typically 
appear as a separate inbound call to the recipient in the voice 
provider's call records.\112\ The individual consumer stated retaining 
call detail records was necessary to enforce the TSR and ``a fair 
compromise'' in comparison to requiring recordings of all telemarketing 
transactions which would be overly burdensome to small businesses.\113\
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    \108\ Cassady 34-2; EPIC 34-23 at 4; NAAG 34-20 at 5; WPF 34-21 
at 2.
    \109\ NAAG 34-20 at 5.
    \110\ EPIC 34-23 at 4.
    \111\ Id.
    \112\ WPF 34-21 at 2; NAAG 34-20 at 6.
    \113\ Cassady 34-2.
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    PACE notes some of its members are able to maintain the requested 
records and already do so in the ordinary course of business, but the 
proposed amendments may not be technically feasible for all members, 
particularly those who do not use software to engage in telemarketing 
but use employees in retail locations.\114\ PACE members raised 
particular concerns about the technical capacity to record ``the 
duration of the call, disposition of the call, and to whom the call was 
transferred.'' \115\
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    \114\ PACE 33-15 at 2.
    \115\ Id.
---------------------------------------------------------------------------

    As explained in the 2022 NPRM, the proposed addition of Section 
310.5(a)(2) is necessary for the Commission to determine whether the 
TSR applies and which sections of the TSR the seller and telemarketer 
must comply with for a telemarketing campaign.\116\ The Commission is 
cognizant this amendment will require some administrative costs in 
establishing a new recordkeeping system. In the 2022 NPRM, the 
Commission provided an estimate of those costs and invited comment 
about those estimates,\117\ but did not receive any public comment 
specifically disputing its estimates. Nevertheless, in determining 
whether to implement the proposed amendments, the Commission considers 
whether the proposed amendments strike an appropriate balance between 
the goal of protecting consumers from deceptive or abusive 
telemarketing and the harm from imposing compliance burdens.
---------------------------------------------------------------------------

    \116\ 2022 NPRM, 87 FR at 33680-82, 33684.
    \117\ 2022 NPRM, 87 FR at 33690-91.
---------------------------------------------------------------------------

    To address the concerns raised by the public comments, the 
Commission will provide a grace period of one hundred and eighty days 
from the date Section 310.5(a)(2) is published in the Federal Register 
for sellers and telemarketers to implement any new systems, software, 
or procedures necessary to comply with this new provision. Furthermore, 
the Commission will modify this amendment and provide an exemption for 
calls made by an individual telemarketer who manually enters a single 
telephone number to initiate a call. For such calls, the seller or 
telemarketer need not retain records of the calling number, called 
number, date, time, duration, and disposition of the telemarketing call 
under Sections 310.5(a)(2)(vii) and (x) but must otherwise comply with 
the other requirements under Section 310.5(a)(2). Making this 
modification should alleviate the general concerns commenters have 
raised regarding the feasibility and burden of creating and retaining 
call detail records. The Commission is not persuaded that requiring 
sellers and telemarketers to retain call detail records of their 
telemarketing campaigns would impose an undue burden if the seller or 
telemarketer can use automated mechanisms to conduct their campaigns 
instead of placing calls manually. In those situations, as PACE notes, 
the seller or telemarketer already maintains similar call detail 
records in the ordinary course of business.\118\
---------------------------------------------------------------------------

    \118\ PACE 33-15 at 2.
---------------------------------------------------------------------------

    Nor is the Commission persuaded by Sirius' arguments that the 
proposed amendments are overly prescriptive and requiring retention of 
these records would stifle innovation. The proposed amendments merely 
identify the information sellers and telemarketers must retain. It does 
not dictate the form or ``look and feel'' of business records as 
Sirius' suggests. As discussed in more detail in Section III.A.11--
Format of Records, the Commission believes the amendment to Section 
310.5(a)(2) strikes the appropriate balance between providing 
specificity about the information sellers and telemarketers are 
required to keep without prescribing how it must do so.
    EPIC and WPF's comments also suggested additional modifications to 
Section 310.5(a)(2). WPF requested the Commission consider requiring 
sellers and telemarketers to retain records of their use of voice 
biometrics in call centers, including whether voice biometrics 
recognition or voice emotion analysis software was used, whether a 
consumer's records were marked with any inferences from any voice 
biometric analysis, and whether that analysis was shared with any other 
parties.\119\ The FTC's Policy Statement on Biometric Information notes 
significant privacy concerns regarding the collection and use of 
biometric information and the possibility such practices may be 
considered an ``unfair'' practice under Section 5 of the FTC Act.\120\ 
Furthermore, the collection and use of such information might be 
considered abusive and violative of a consumer's right to privacy, 
which Congress gave the Commission the power to regulate

[[Page 26768]]

with respect to telemarketing.\121\ Although the Commission does not 
believe it has the evidence now either to require the retention of 
voice biometric recognition data in telemarketing or place restrictions 
on its use, it will continue to monitor voice biometric use in 
telemarketing.
---------------------------------------------------------------------------

    \119\ WPF 34-21 at 2.
    \120\ FTC, Policy Statement of the Federal Trade Commission on 
Biometric Information and Section 5 of the Federal Trade Commission 
Act (May 18, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/p225402biometricpolicystatement.pdf (last visited Jan 
24, 2024).
    \121\ 15 U.S.C. 6102(a)(1).
---------------------------------------------------------------------------

    EPIC requested the Commission consider requiring telemarketers and 
sellers to also retain records of campaign IDs for each call, arguing 
it is necessary to tie the call detail records to a particular 
campaign.\122\ The Commission recognizes the concern EPIC has raised 
and addressed it by requiring sellers and telemarketers to retain 
records that identify, for each call, the nature and purpose of that 
call, such as the seller or soliciting charity for whom the 
telemarketing call was placed, the good or service sold or the 
charitable purpose of the call, and the telemarketing script or the 
robocall recording that was used. This information is at least as 
comprehensive as a campaign ID. The Commission believes specifying the 
substantive information sellers and telemarketers are required to 
retain, rather than identifying a particular data category such as 
campaign ID that may be subject to change over time, will more 
effectively enable the Commission and other regulators to enforce the 
TSR.
---------------------------------------------------------------------------

    \122\ EPIC 34-23 at 5.
---------------------------------------------------------------------------

    Finally, EPIC requested the Commission consider requiring sellers 
and telemarketers to keep records of the originating or gateway 
telecommunications provider for each campaign, rather than any service 
provider the telemarketer is in a business relationship with, as the 
NPRM proposes.\123\ The Commission believes requiring retention of the 
call detail records and records of the seller or telemarketer's service 
providers strikes an appropriate balance between the Commission's 
interest in having sufficient information to enforce the TSR and 
industry's concerns regarding burden.
---------------------------------------------------------------------------

    \123\ Id.
---------------------------------------------------------------------------

3. Sections 310.5(a)(3) and (4)--Prize Recipients and Customer Records
    The TSR currently requires telemarketers and sellers to retain the 
``name and last known address'' of each prize recipient.\124\ The 2022 
NPRM proposed requiring sellers and telemarketers to also retain the 
last known telephone number and physical or email address for each 
prize recipient. The Commission received three comments regarding this 
proposal, and all were supportive of the amendment. PACE states it 
believes this was a ``prudent measure, and many telemarketers and 
sellers that reward prizes likely already comply with this proposal.'' 
\125\ NAAG agrees, stating the requirement ``reflects current business 
practices'' and telemarketers and sellers ``likely keep such 
information in the regular course of their business.'' \126\ WPF 
concurs, but also suggests the Commission consider requiring sellers 
and telemarketers to retain this data in an encrypted state.\127\
---------------------------------------------------------------------------

    \124\ 16 CFR 310.5(a)(2).
    \125\ PACE 33-15 at 4.
    \126\ NAAG 34-20 at 9.
    \127\ WPF 34-21 at 3.
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    With respect to ``Customer Records'' under Section 310.5(a)(4), the 
TSR requires sellers or telemarketers to retain the ``name and last 
known address of each customer, the goods or services purchased, the 
date such goods or services were shipped or provided, and the amount 
paid by the customer for the goods or services.'' \128\ Similarly, the 
Commission proposed modifying this provision to account for current 
business practices and require the retention of the customer's last 
known telephone number and the customer's last known physical address 
or email address. The Commission also proposed adding the date the 
consumer purchased the good or service to account for the new 
requirement that telemarketers and sellers keep records of each 
consumer with whom a seller intends to assert it has an EBR.\129\
---------------------------------------------------------------------------

    \128\ 16 CFR 310.5(a)(3).
    \129\ 2022 NPRM, 87 FR at 33686.
---------------------------------------------------------------------------

    The Commission received four comments regarding this amendment. 
NAAG and PACE support this proposal, and agree it is necessary to 
establish EBR and likely that telemarketers and sellers already retain 
this information in the ordinary course of business.\130\ EPIC and WPF, 
however, do not support this amendment unless the Commission 
concurrently passes commensurate privacy protections.\131\
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    \130\ NAAG 34-20 at 9; PACE 33-15 at 5.
    \131\ EPIC 34-23 at 15; WPF 34-21 at 3. When consumer data is 
transferred as part of the sale, assignment, or change in ownership, 
dissolution, or termination of the business, EPIC also urges the 
Commission to require a successor to acknowledge liability for any 
TSR violations regarding the calls that those records document. EPIC 
34-23 at 15-16. EPIC argues that this will deter a fraudulent seller 
or telemarketer from shutting their businesses and selling their 
assets, including customer lists, to a sham successor as a means of 
evading liability. The Commission does not believe such an amendment 
is necessary at this time.
---------------------------------------------------------------------------

    The Commission notes that, as it recognized in the 2022 NPRM, 
requiring sellers and telemarketers to retain additional personal 
identifying information (such as consumers' names, phone numbers, and 
either their physical or email address, in combination with goods or 
services they purchased) may raise privacy concerns.\132\ The 
Commission emphasizes once more that sellers and telemarketers have an 
obligation under Section 5 of the FTC Act to adhere to the commitments 
they make about their information practices and take reasonable 
measures to secure consumers' data.\133\
---------------------------------------------------------------------------

    \132\ 2022 NPRM, 87 FR at 33686.
    \133\ See generally Federal Trade Commission 2020 Privacy and 
Data Security Update, available at https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-2020-privacy-data-security-update/20210524_privacy_and_data_security_annual_update.pdf 
(last visited Dec. 11, 2023).
---------------------------------------------------------------------------

    But the Commission also recognizes the concerns raised by the 
comments. It agrees additional protections, similar to those it 
incorporated into the TSR when it prohibited the sale or use of any 
lists established or maintained to comply with the TSR's DNC Registry 
or entity-specific DNC,\134\ should also apply to any lists of 
consumers that sellers or telemarketers create or maintain in order to 
comply with the amended recordkeeping provisions.
---------------------------------------------------------------------------

    \134\ 2003 TSR Amendments, 68 FR at 4645.
---------------------------------------------------------------------------

    Thus, the Commission will amend Section 310.4(b)(2) to state it is 
also an abusive telemarketing act or practice and a violation of the 
TSR for any person to sell, rent, lease, purchase, or use any list 
established to comply with Section 310.5. Amending the TSR to specify 
that the sale or use of a list created to comply with the recordkeeping 
provisions is consistent with the Telemarketing Act's emphasis on 
privacy protection. The Act authorizes the Commission to regulate 
``calls which the reasonable consumer would consider coercive or 
abusive of such consumer's right to privacy.'' \135\ The Commission 
agrees with commenters that consumers would consider it coercive and an 
abuse of their right to privacy if telemarketers or sellers are allowed 
to use any consumer information they collect and maintain under the 
TSR's recordkeeping provisions for any other purpose.
---------------------------------------------------------------------------

    \135\ 15 U.S.C. 6102(a)(3)(A); see also 2002 NPRM, 67 FR at 
4510-11.
---------------------------------------------------------------------------

4. Section 310.5(a)(5)--Established Business Relationship
    The 2022 NPRM proposed adding Section 310.5(a)(5) to further 
clarify what records a seller must keep to ``demonstrate that the 
seller has an established business relationship'' with a consumer. 
Specifically, for each consumer with whom a seller asserts it

[[Page 26769]]

has an established business relationship, the seller must keep a record 
of the name and last known phone number of that consumer, the date the 
consumer submitted an inquiry or application regarding that seller's 
goods or services, and the goods or services inquired about.\136\
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    \136\ A seller may also show it has an established business 
relationship with a consumer if that consumer purchased, rented, or 
leased the seller's goods or services or had a financial transaction 
with the seller during the 18 months before the date of the 
telemarketing call. The Commission is modifying the existing 
recordkeeping provisions to state that records of existing customers 
should also include the date of the financial transaction to support 
the existence of an EBR under these circumstances. See Section 
III.A.3 (Prize Recipients and Customer Records).
---------------------------------------------------------------------------

    The Commission received five comments addressing this proposed 
amendment. EPIC,\137\ NAAG, and PACE all support this amendment, 
agreeing it is necessary for a seller to establish a business 
relationship with a consumer and it is likely businesses already retain 
such records.\138\ The Ohio Credit Union League (``OCUL'') made a 
general objection stating it was unclear when a credit union member's 
business relationship begins or ends, while Sirius objected on the 
grounds ``it was unnecessary'' since ``sellers and telemarketers must 
already collect information sufficient to demonstrate an established 
business relationship to use as an affirmative defense.'' \139\
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    \137\ EPIC also urged the Commission to modify the EBR 
requirements to include consumers who purchased a good or service 
from the seller. EPIC 34-23 at 14. The Commission does not believe 
this is necessary since sellers and telemarketers must already keep 
records of customers, which includes consumers who purchased a good 
or service from the seller. 16 CFR 310.5(a)(3). Furthermore, as 
discussed in Section III.A.3--Prize Recipients and Customer Records 
above, the Commission is amending the customer records provision to 
include the date the consumer purchased the good or service to 
account for the new EBR recordkeeping requirements.
    EPIC also urges the Commission to consider clarifying that EBR 
may only be asserted as an affirmative defense if the seller or 
telemarketer intentionally called the consumer because it has an 
established business relationship with the consumer. EPIC 34-23 at 
15. The TSR does not currently contemplate the use of EBR in this 
manner but rather allows telemarketers and sellers to call a 
consumer if the seller can demonstrate it has an EBR with that 
consumer and otherwise meets other requirements under the TSR. 
Making any modifications to this framework would require additional 
consideration.
    \138\ EPIC 34-23 at 15; NAAG 34-20 at 7; and PACE 33-15 at 2-3.
    \139\ OCUL 34-19 at 2; Sirius 34-18 at 5.
---------------------------------------------------------------------------

    The Commission is not persuaded by either OCUL's or Sirius's 
objections. As the Commission noted in its 2022 NPRM, this requirement 
only applies if a seller intends to assert it has an established 
business relationship with a consumer.\140\ As Sirius notes, sellers 
must already collect this information in the ordinary course of 
business and thus the amendment should not impose an additional burden.
---------------------------------------------------------------------------

    \140\ 2022 NPRM, 87 FR at 33685.
---------------------------------------------------------------------------

5. Section 310.5(a)(6)--Previous Donor
    Similar to the EBR requirements described above, the Commission 
also proposed adding Section 310.5(a)(6) to clarify that, if a 
telemarketer intends to assert that a consumer is a previous donor to a 
particular charity,\141\ the telemarketer must keep a record, for each 
such consumer, of the name and last known phone number of that 
consumer, and the last date the consumer donated to the particular 
charity. The Commission received two comments on this proposed 
amendment. NAAG agreed with this proposed amendment, stating it was 
akin to the proposed amendment for EBR and should not ``impose any 
undue burden.'' \142\ WPF concurred stating the new recordkeeping 
provision will ``serve to clarify the exemption for charitable 
donations.'' \143\
---------------------------------------------------------------------------

    \141\ The Commission also proposed adding a new definition of 
``previous donor.'' See supra Section II.C.
    \142\ NAAG 34-20 at 7.
    \143\ WPF 34-21 at 1.
---------------------------------------------------------------------------

6. Section 310.5(a)(8)--Records of Consent
    Section 310.5(a)(5) of the TSR requires sellers or telemarketers to 
keep records of ``[a]ll verifiable authorizations or records of express 
informed consent or express agreement required to be provided or 
received under this Rule.'' The Commission proposed modifying this 
provision to clarify what constitutes a complete record of consent 
sufficient for a telemarketer or seller to assert an affirmative 
defense.\144\ It wanted to make clear that common practices previously 
employed by telemarketers or sellers, such as maintaining a list of IP 
addresses and timestamps as proof of consent, are insufficient to 
demonstrate that a consumer has, in fact, provided consent to receive 
robocalls or receive telemarketing calls when the consumer has 
registered her phone number on the DNC Registry.\145\
---------------------------------------------------------------------------

    \144\ 2022 NPRM, 87 FR 33686-87.
    \145\ Id. at 33681.
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    Specifically, the 2022 NPRM proposed that for each consumer from 
whom a seller or telemarketer states it has obtained consent, sellers 
or telemarketers must maintain records of that consumer's name and 
phone number, a copy of the consent requested in the same manner and 
format it was presented to that consumer, a copy of the consent 
provided, the date the consumer provided consent, and the purpose for 
which consent was given and received.\146\ For a copy of the consent 
provided under Sections 310.3(a)(3), 310.4(a)(7), 
310.4(b)(1)(iii)(B)(1), or 310.4(b)(1)(v)(A), a complete record must 
also include all of the requirements outlined in those respective 
sections.\147\ The 2022 NPRM also stated if consent were requested 
verbally, a copy of the telemarketing script of the request would 
suffice as a copy of the consent requested, and a recording of the 
conversation was not necessary unless another provision of this Rule 
required it.\148\
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    \146\ Id. at 33686-87.
    \147\ Id. For example, a copy of the consent provided to receive 
prerecorded sales messages under Section 310.4(b)(1)(v)(A) must 
evidence, in writing: (1) the consumer's name, telephone number, and 
signature; (2) that the consumer stated she is willing to receive 
prerecorded messages from or on behalf of a specific seller; (3) 
that the seller obtained consent only after clearly and 
conspicuously disclosing that the purpose of the written agreement 
is to authorize that seller to place prerecorded messages to that 
consumer; and (4) that the seller did not condition the sale of the 
relevant good or service on the consumer providing consent to 
receive prerecorded messages. The TSR also states that a seller must 
obtain consent from the consumer, and the Commission reiterates that 
this means a seller must obtain consent directly from the consumer 
and not through a ``consent farm.''
    \148\ 2022 NPRM, 98 FR at 33686-87.
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    The Commission received four comments regarding this proposed 
amendment. EPIC, NAAG, PACE, and WPF all generally support the proposed 
amendment.\149\ PACE states it ``welcomes these provisions in order to 
better ascertain what records are necessary to assert an affirmative 
defense'' and the proposed records ``flow logically from the TSR.'' 
\150\
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    \149\ See EPIC 34-23 at 10-11; NAAG 34-20 at 10; PACE 33-15 at 
5; and WPF 34-21 at 3.
    \150\ PACE 33-15 at 5.
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    But EPIC, NAAG, and WPF also submitted suggestions on additional 
amendments, arguing the Commission should implement more stringent 
requirements. WPF suggests the Commission consider updating how a 
consumer ``may withdraw or revoke consent, and create responsibilities 
for telemarketers to provide a clear opportunity to revoke or consent 
in each communication.'' \151\ EPIC asks the Commission to specify that 
in identifying the ``specific seller'' from whom a consumer has 
provided written express agreement to receive robocalls, the 
telemarketer or seller must retain records of the ``legal name of the 
seller whose goods [or] services are being promoted.'' \152\ EPIC 
believes this will

[[Page 26770]]

``reduce obfuscation'' on the ``scope of the consumer's consent'' and 
identify the proper defendant if ``legal action is necessary.'' \153\
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    \151\ WPF 34-21 at 3.
    \152\ EPIC 34-23 at 10-13.
    \153\ Id.
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    The Commission believes WPF's recommendation is primarily 
applicable to transactions involving a negative option feature \154\ 
where a consumer may wish to cancel a subscription plan and revoke 
billing authorization. The Commission published a Notice of Proposed 
Rulemaking regarding the Negative Option Rule (``Negative Option 
NPRM'') on April 24, 2023, which also addresses telemarketing 
transactions.\155\ Because the proposed Negative Option Rule would 
apply a more comprehensive and consistent framework for negative option 
transactions regardless of the sales medium, the Commission declines to 
make any further amendments to the TSR to address WPF's comment at this 
time.
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    \154\ A negative option feature is defined as ``an offer or 
agreement to sell or provide any goods or services, a provision 
under which a customer's silence or failure to take an affirmative 
action to reject goods or services or to cancel the agreement is 
interpreted by the seller as acceptance of the offer.'' 16 CFR 
310.2(w).
    \155\ 88 FR 24716 (Apr. 24, 2023).
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    With respect to EPIC's request regarding the identification of a 
``specific seller,'' the Commission stated in the Statement of Basis 
and Purpose finalizing the TSR amendments prohibiting robocalls that it 
used the term ``specific seller'' to ``make it clear that prerecorded 
calls may be placed only by or on behalf of the specific seller 
identified in the agreement.'' \156\ The Commission wanted to ensure 
any agreement to receive robocalls would be limited to the seller 
identified in the agreement and could not be transferrable to any other 
party.\157\ Requiring companies to use the legal entity name to 
identify the specific seller in the written agreement is a natural 
extension of the Commission's intention in using the term ``specific 
seller.'' Thus, the Commission states now that in identifying the 
specific seller in any written agreement, the seller should use its 
legal entity name to make clear any agreement to receive robocalls is 
limited to that specific legal entity. The Commission also states the 
burden will be on the seller or telemarketer to ensure and prove a 
consumer understands which specific legal entity would be permitted to 
send the consumer robocalls. In circumstances where the legal entity's 
name may not be recognizable to consumers, perhaps because the 
consumers would recognize a brand or product name but not the legal 
entity name, the seller or telemarketer may need to take extra steps to 
ensure the consumer has knowingly agreed to receive robocalls from the 
specific seller.
---------------------------------------------------------------------------

    \156\ 2008 TSR Amendments 73 FR at 51186; see also supra note 
147.
    \157\ 2008 TSR Amendments 73 FR at 51186.
---------------------------------------------------------------------------

    EPIC also requests the Commission require sellers and telemarketers 
to ``retain records regarding the owner of the website where consent 
was purportedly obtained'' and a record of ``the relevant webform 
completion, or of some other admissible evidence of the specific 
consumer providing consent via a specific web page on a specific date/
time.'' \158\ For telemarketers or sellers who obtain consumer consent 
via a website, the Commission believes the new recordkeeping provision 
requiring records of ``a copy of the request for consent in the same 
manner and format in which was presented to that consumer'' would 
require a telemarketer or seller to keep a copy of the web page or web 
pages that were used to request consent from the consumer. The copy of 
the web page could be maintained as screenshots so long as the 
screenshot accurately reflects what a consumer viewed in providing 
consent. Sellers and telemarketers who obtain consent via website will 
also need to keep ``a copy of the consent provided'' under the new 
recordkeeping provisions. The Commission believes a screenshot of the 
web page a consumer completed to provide consent could satisfy this 
requirement if the screenshot also accurately reflects what a consumer 
submitted in providing consent. The Commission declines to specify the 
format a company must use to keep a copy of consent requested or 
provided to allow businesses the flexibility of retaining records as 
they would in the ordinary course of business. Rather, it believes 
specifying the categories of information required to adequately reflect 
consent will provide sufficient guidance. The Commission cautions, 
however, an IP address with a timestamp is not sufficient as a record 
of consent. The Commission does not believe any additional amendments 
are necessary at this time.\159\
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    \158\ EPIC 34-23 at 12.
    \159\ EPIC also requested that the Commission clarify that the 
TSR's language regarding consent is similar to the TCPA's language 
regarding consent or that the consent requirements do not ``lower 
the bar below the current requirements of the TCPA.'' EPIC 34-23 at 
13. The new amendments to the TSR do not alter substantive 
requirements for consent under the TSR. They merely clarify what 
records are necessary to maintain proof of consent.
---------------------------------------------------------------------------

    EPIC and NAAG also raised concerns regarding the Commission's 
statement regarding the records for verbal consent. In the 2022 NPRM, 
the Commission stated if a seller or telemarketer requests consent 
verbally, a telemarketing script would suffice as a record of the 
consent requested as long as no other provision of the TSR required a 
recording.\160\ EPIC requests the Commission make clear the reference 
to verbal consent only applies to billing authorization under Section 
310.4(a)(7), and any authorization required to receive robocalls or to 
receive telemarketing calls to phone numbers on the DNC Registry must 
be provided in writing. EPIC also raised concerns over whether the 
Commission's statement meant that a script is an ``acceptable record of 
the language the caller used to request consent'' or if ``the 
Commission is also suggesting that [a script] is an acceptable record 
of the consumer's grant of consent.'' \161\ If the former, EPIC argues 
using a telemarketing script as a record of the request for consent is 
insufficient when telemarketers often fail to follow the scripts.\162\ 
If the latter, EPIC argues it would ``eviscerate the recordkeeping 
requirement'' when the new consent requirements include `` `a copy of 
the request provided.' '' \163\ EPIC also argues allowing a recording 
of only the consent provided without the actual request for consent 
would allow the telemarketer or seller to record a series of the ``word 
`yes,' which would be meaningless without any context.'' \164\ NAAG 
takes it a step further and urges the Commission to require recordings 
of the entire telemarketing transaction whenever consent is requested 
verbally.\165\
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    \160\ 2022 NPRM, 87 FR at 33687.
    \161\ EPIC 34-23 at 11.
    \162\ Id.
    \163\ Id.
    \164\ Id.
    \165\ NAAG 34-20 at 10. NAAG has also urged the Commission to 
require a recording whenever a telemarketing call includes a 
negative option offer. NAAG 34-20 at 6. It also requests that the 
Commission require a full refund if a consumer complains of 
unauthorized charges and the seller is unable to provide a recording 
of the transaction as proof of consent. Id. Since the Commission has 
issued the Negative Option NPRM, the Commission will not address 
this comment here.
---------------------------------------------------------------------------

    The 2022 NPRM specifies that, with respect to requests for verbal 
consent where no provision of the TSR requires a recording, a 
telemarketing script would be sufficient for a copy of the request for 
consent. It did not propose that a telemarketing script would be 
sufficient as a record of the consent provided. But the Commission 
recognizes the concerns raised by NAAG and EPIC, that without a 
recording of the consent requested, a recording of the request provided 
would

[[Page 26771]]

be meaningless. Given that industry has stated scripts are not ``set in 
stone'' and ``[w]ell-trained telemarketers are able to deviate from 
scripts or not use them at all,'' \166\ the Commission states that, for 
a complete record of consent that is requested verbally and where no 
provision of the TSR requires a recording, a telemarketer or seller 
must retain a recording of the consent requested as well as the consent 
provided to comply with proposed Section 310.5(a)(8). In addition, the 
recording must make clear the purpose for which consent was provided. 
The Commission does not believe requiring a recording of both the 
consent requested and provided would result in additional burden to 
businesses since it believes most businesses would have made a 
recording of both to comply with the recordkeeping provisions in the 
ordinary course of business.
---------------------------------------------------------------------------

    \166\ ECAC 34-22 at 4.
---------------------------------------------------------------------------

    In further response to NAAG and EPIC's concern, the Commission does 
not believe a recording of the entire telemarketing transaction is 
necessary if it is not otherwise required by another provision of the 
TSR. To require a recording of the entire transaction whenever consent 
is requested would effectively require a recording of all telemarketing 
transactions that are subject to the TSR.\167\
---------------------------------------------------------------------------

    \167\ The TSR states it is an abusive practice to ``cause 
billing information to be submitted for payment, directly or 
indirectly, without the express informed consent of the customer or 
donor.'' 16 CFR 310.4(a)(7). This prohibition applies to all 
telemarketing transactions subject to the TSR. Thus, requiring a 
recording of every telemarketing call whenever consent is requested 
would essentially mean that all telemarketing calls subject to the 
TSR would need to be recorded.
---------------------------------------------------------------------------

    The Commission reiterates that sellers and telemarketers remain 
obligated to comply with all requirements outlined in other consent 
provisions in the TSR.\168\ For transactions involving preacquired 
account information, telemarketers and sellers must fulfill the 
requirements of Section 310.4(a)(7)(i) and (ii), which include 
recording the entire telemarketing transaction if there is a free-to-
pay conversion feature. For consent to receive robocalls or calls to 
phone numbers on the DNC Registry, telemarketers and sellers must abide 
by the requirements of Sections 310.4(b)(1)(iii)(B)(1) and 
(b)(1)(v)(A), respectively, which include obtaining a consumer's 
written consent.\169\ And for telemarketing transactions using certain 
payment methods, telemarketers and sellers must comply with Section 
310.3(a)(3), which includes obtaining a consumer's authorization to be 
billed in writing or, if verbal consent is requested, a recording of 
the transaction that evidences a consumer has received specific 
information. The Commission reiterates this rule amendment does not 
modify the requirements for consent outlined in the TSR; rather it 
clarifies what records must be kept to demonstrate compliance with the 
existing requirements.
---------------------------------------------------------------------------

    \168\ See 16 CFR 310.3(a)(3), 310.4(a)(7), 
310.4(b)(1)(iii)(B)(1), and 310.4(b)(1)(v)(A).
    \169\ The Commission reiterates that a seller or telemarketer 
may not use an oral recording of consent for any provision of the 
TSR that requires consent to be provided in writing.
---------------------------------------------------------------------------

7. Section 310.5(a)(9)--Other Service Providers
    The Commission proposed requiring sellers and telemarketers to keep 
records of all service providers the telemarketer uses to deliver an 
outbound call in their telemarketing campaigns, such as voice 
providers, autodialers, sub-contracting telemarketers, or soundboard 
technology platforms. The provision would only apply to the service 
providers with which the seller or telemarketer has a business 
relationship, and not to every service provider involved in delivering 
an outbound call. For each service provider, the seller or telemarketer 
would keep records of any applicable contracts, the date the contract 
was signed, and the time period the contract is in effect. The seller 
or telemarketer would keep such records for five years from the date 
the contract expires or five years from the date the telemarketing 
activity covered by the contract ceases, whichever is shorter.
    The Commission received four comments on this proposal. EPIC, NAAG, 
PACE, and WPF all support the proposed amendment, but also suggested 
some modifications.\170\ WPF repeated its request the Commission use 
broader terminology than ``soundboard technology platforms'' in 
defining service providers.\171\ EPIC repeated its request the 
Commission require sellers and telemarketers to also keep records of 
which service provider they used for each telemarketing campaign to 
ensure those service providers are also complying with the TSR.\172\
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    \170\ EPIC 34-23 at 7-8; NAAG 34-20 at 7-8; PACE 33-15 at 3; WPF 
34-21 at 2.
    \171\ WPF 34-21 at 2; see also Section III.A.2 (Call Detail 
Records).
    \172\ EPIC 34-23 at 8.
---------------------------------------------------------------------------

    The Commission clarifies that service providers referenced under 
this provision include any entity that provides ``digital soundboard'' 
technology rather than ``soundboard technology platforms,'' to make 
clear that sellers and telemarketers must retain records of any entity 
that provides any digital or sound technologies that sellers or 
telemarketers use to convey a verbal message to a consumer in 
telemarketing. This includes, for example, service providers that 
telemarketers or sellers use to mimic or clone the voice of an 
individual to deliver live and prerecorded outbound telemarketing 
calls. With respect to EPIC's concerns of ensuring service providers 
are also complying with the TSR, as discussed above in Section 
III.A.2--Call Detail Records, the Commission believes it is not 
necessary to require records of the service provider used per 
telemarketing campaign. Requiring retention of all call detail records 
and records of the service providers used in making outbound 
telemarketing calls would be sufficient for the Commission and other 
law enforcement agencies to enforce the TSR and strikes an appropriate 
balance against industry's concerns regarding burden.
    PACE requests the Commission limit this provision to the service 
providers with which sellers and telemarketers have a direct 
contractual relationship rather than a ``business relationship.'' \173\ 
PACE argues it would be unreasonable to expect a seller to maintain 
records of its telemarketers' voice providers when the contractual 
relationship is between the telemarketer and voice provider.\174\ PACE 
also asks the Commission limit the five year retention time period from 
the date the contract expires rather than when the telemarketing 
activity covered by the contract ceases.\175\ PACE expressed concerned 
one party to the contract might cease the telemarketing activity 
without informing the other party and it would be difficult to identify 
when the retention period is triggered.\176\
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    \173\ PACE 33-15 at 3.
    \174\ Id.
    \175\ Id.
    \176\ Id.
---------------------------------------------------------------------------

    The Commission recognizes the potential for uncertainty in the 
scenario PACE raises and will modify the recordkeeping requirements 
accordingly to require retention of any records under this provision 
for five years from the date the contract expires.\177\ With respect to 
PACE's request to limit the recordkeeping requirements to those service 
providers with whom sellers or telemarketers have a direct contractual 
relationship, the Commission is not persuaded that requiring records of 
service providers with which they have a business relationship would 
cause

[[Page 26772]]

additional burden. As explained in more detail in Section III.A.14--
Compliance Obligation, the Commission will allow sellers and 
telemarketers to allocate recordkeeping responsibilities between 
themselves. In the scenario that PACE raises, a seller can simply 
require their telemarketer to retain records of all the service 
providers it uses to make outbound telemarketing calls on the seller's 
behalf.
---------------------------------------------------------------------------

    \177\ If, after the end of a fixed term contract, a service 
provider continues to provide services and the telemarketer or 
seller continues to pay for those services, the Commission will 
consider the contract extended until performance ceases.
---------------------------------------------------------------------------

8. Sections 310.5(a)(10)--Entity-Specific DNC List
    The 2022 NPRM also proposed requiring telemarketers and sellers to 
maintain for five years records related to the entity-specific DNC list 
and its corresponding safe harbor provision under Section 
310.4(b)(3)(iii).\178\ Specifically, the Commission proposed requiring 
telemarketers and sellers to retain records of: (1) the consumer's 
name, (2) the phone number(s) associated with the DNC request, (3) the 
seller or charitable organization from which the consumer does not wish 
to receive calls, (4) the telemarketer that made the call; (5) the date 
the DNC request was made; and (6) the good or service being offered for 
sale or the charitable purpose for which contributions are being 
solicited.
---------------------------------------------------------------------------

    \178\ 2022 NPRM, 87 FR at 33686.
---------------------------------------------------------------------------

    The Commission received four comments on this proposal. NAAG, PACE, 
and WPF, generally support the provision, noting that businesses likely 
retain this information in the ordinary course of business, while ECAC 
raised concerns.\179\ ECAC agrees that businesses likely keep most of 
the data listed in the proposed provision, but stated the requirements 
should not include retention of consumer phone numbers or records of 
the purpose of the call (e.g., the good or service offered for sale or 
the charitable purpose of contributions solicited) because both are 
burdensome to retain and irrelevant to the entity-specific TSR 
provisions.\180\ Instead, ECAC argues the Commission should modify the 
entity-specific DNC requirements so it prohibits calls to specific 
numbers rather than specific people, similar to how the DNC Registry is 
applied.\181\ PACE also requested the Commission clarify that the new 
entity-specific DNC recordkeeping provision requires retention of the 
telemarketing entity that made the call rather than the individual 
telemarketer.\182\
---------------------------------------------------------------------------

    \179\ ECAC 34-22 at 4; NAAG 34-20 at 8; PACE 33-15 at 3-4; WPF 
34-21 at 3.
    \180\ ECAC 34-22 at 4.
    \181\ Id.
    \182\ PACE 33-15 at 4.
---------------------------------------------------------------------------

    The Commission clarifies that the new recordkeeping provision 
requires retention of the identity of the telemarketing company that 
made the call and not the individual telemarketer. This requirement is 
particularly important for sellers or charitable organizations who 
engage multiple telemarketing entities to sell their good or service or 
seek a charitable contribution through telemarketing. Sellers or 
charities already should know which telemarketing entity logged the 
consumer's request to cease receiving calls on their behalf and ensure 
all their telemarketers abide by that request.
    Similarly, when a telemarketer engages in telemarketing on behalf 
of multiple sellers or charitable organizations, it is important to 
require the retention of records of the purpose of the call any time a 
consumer asks a telemarketer to add them to the entity-specific DNC 
list. Since the entity-specific DNC prohibition is seller or charitable 
organization specific, telemarketers already should retain this 
information in the ordinary course of business because telemarketers 
must keep track of which seller on whose behalf they cannot contact 
specific consumers.
    With respect to ECAC's concerns that retaining consumer phone 
numbers is irrelevant and overly burdensome, the Commission notes the 
safe harbor provision for the entity-specific DNC list is phone-number 
based and not based on a consumer's name. Section 310.4(b)(3) states 
that a seller or telemarketer shall not be liable for violating the 
entity-specific DNC provisions if, among other things, they maintain 
and record a ``list of telephone numbers the seller or charitable 
organization may not contact, in compliance with [the entity-specific 
DNC provision.]'' \183\ Telemarketers must already retain a consumer's 
phone number in the ordinary course of business to comply with the TSR; 
including it in the new recordkeeping provision would not impose 
additional burden on businesses.
---------------------------------------------------------------------------

    \183\ 16 CFR 310.4(b)(3)(iii).
---------------------------------------------------------------------------

9. Section 310.5(a)(11)--DNC Registry
    The 2022 NPRM also proposed requiring telemarketers and sellers to 
maintain, for five years, records of every version of the FTC's DNC 
Registry the telemarketer or seller downloaded in implementing the 
process referenced in the safe harbor provision of Section 
310.4(b)(3)(iv).\184\
---------------------------------------------------------------------------

    \184\ 2022 NPRM, 87 FR at 33686.
---------------------------------------------------------------------------

    The Commission received four comments on this provision. NAAG, 
PACE, and WPF generally support the proposed provision, but also 
request some clarifications or modifications, while ECAC generally 
objects to the requirement.\185\ WPF notes it ``strongly support[s]'' 
the proposed changes, noting they would ensure the ``integrity of the 
Do Not Call Registry.'' \186\ ECAC argues the Commission should not 
require records of every version of the DNC Registry used because it 
``imposes significant costs and burdens'' that ``greatly exceed any 
marginal benefit'' to the Commission, particularly when many of its 
members outsource scrubbing responsibilities to third parties and may 
never download the DNC Registry in the first place.\187\
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    \185\ ECAC 34-22 at 4; NAAG 34-20 at 8; PACE 33-15 at 3-4; WPF 
34-21 at 3.
    \186\ WPF 34-21 at 3.
    \187\ ECAC 34-22 at 4.
---------------------------------------------------------------------------

    WPF requests the Commission require telemarketers to keep records 
of how many times they accessed the DNC Registry or parts of the DNC 
Registry.\188\ PACE requests the Commission clarify how it believes 
sellers and telemarketers would comply with the proposal that they 
retain records of ``every version of the registry they have 
downloaded.'' \189\ PACE states it would be ``redundant'' if the 
Commission is requiring businesses to ``maintain separate versions of 
the registry apart from the up-to-date one'' since most businesses only 
``scrub against the current version'' of the registry in the ordinary 
course of business.\190\ PACE would support requiring them to 
``document the version of the registry they used'' since doing so would 
reduce ``redundancy and data storage costs associated with keeping 
expired registries.'' \191\
---------------------------------------------------------------------------

    \188\ WPF 34-21 at 3.
    \189\ PACE 33-15 at 4.
    \190\ Id.
    \191\ Id.
---------------------------------------------------------------------------

    Given the objections raised, the Commission will modify this 
provision to clarify that sellers and telemarketers need not keep every 
version of the DNC Registry they accessed to comply with the TSR's safe 
harbor rules. Instead, sellers and telemarketers must retain records of 
which version they used by keeping records of: (1) the name of the 
entity which accessed the registry; (2) the date the DNC Registry was 
accessed; (3) the subscription account number that was used to access 
the registry; and (4) the telemarketing campaign(s) for which it was 
accessed. Amending this provision to retain this information will 
address ECAC's concerns that the seller or telemarketer may use a 
third-party service to access the DNC Registry, and PACE's concern that 
retaining the actual version of the DNC Registry would be

[[Page 26773]]

redundant and burdensome. It would also address WPF's request that 
sellers and telemarketers should keep records of the number of times 
they access the DNC Registry. Presumably, sellers and telemarketers 
only access the DNC Registry to ensure compliance with the TSR's DNC 
prohibitions since accessing the DNC Registry for any other purpose 
would be a violation of the TSR.\192\
---------------------------------------------------------------------------

    \192\ 16 CFR 310.4(b)(2).
---------------------------------------------------------------------------

10. Time Period To Keep Records
    The Commission proposed changing the time period that telemarketers 
and sellers must keep records from two years to five years from the 
date the record is made, except for Sections 310.5(a)(1) and 
(a)(9),\193\ where the Commission proposed requiring retention for five 
years from the date that records covered by those sections are no 
longer in use. The Commission received nine comments on this 
proposal.\194\ EPIC, NAAG, and WPF support the proposal, citing as 
rationales for their support the amount of time necessary to complete 
an investigation of TSR violations and that telemarketers fail to 
comply with litigation holds that are issued while investigations are 
pending.\195\ ECAC, NFIB, OCUL, PACE, Sirius, and the US Chamber of 
Commerce (``Chamber'') all object, raising burden concerns.\196\ PACE 
stated the Commission cannot assume its proposal would not be unduly 
burdensome based on the fact that data storage costs have decreased 
since 2014.\197\ This is particularly true for small businesses, 
according to PACE, when the Commission is simultaneously expanding the 
number of records that must be retained and the length of time those 
records must be retained.\198\ Sirius and OCUL also argue the FTC 
should not require retention of records ``beyond the agency's statute 
of limitations.'' \199\ Sirius argues the appropriate statute of 
limitations is three years,\200\ and OCUL argues that while the TSR 
does not ``specify a statute of limitations,'' courts will ``apply the 
statute of limitations of the state where the case is filed,'' which is 
two years in Ohio.\201\
---------------------------------------------------------------------------

    \193\ The records covered by these two sections include 
advertising materials and a list of the service providers who 
assisted in outbound telemarketing. See supra Sections III.A.1 
(Substantially Different Advertising Materials) and III.A.7 (Other 
Service Providers).
    \194\ 2022 NPRM, 87 FR at 33686.
    \195\ EPIC 34-23 at 4-5; NAAG 34-20 at 8-9; WPF 34-21 at 3.
    \196\ ECAC 34-22 at 6; NFIB 33-4 at 5; OCUL 34-19 at 2-3; PACE 
33-15 at 4; Sirius 34-18 at 3; Chamber 34-24 at 1.
    \197\ PACE 33-15 at 4.
    \198\ Id.
    \199\ Sirius 34-18 at 3.
    \200\ Id.
    \201\ OCUL 34-19 at 2-3.
---------------------------------------------------------------------------

    The Commission is not persuaded by the general burden concerns 
commenters have raised. None of the commenters provided any information 
on what the burden would be and why small businesses would not be able 
to comply with the new recordkeeping amendments. As mentioned in 
Section III.A.2--Call Detail Records, the Commission provided an 
estimate of the additional cost of complying with the new recordkeeping 
amendments but did not receive any comment or data on why its estimate 
is inaccurate.
    Additionally, the Commission notes the statute of limitations for 
the FTC to seek civil penalties under the TSR is five years and not two 
or three years, as some commenters argued. Although the statute of 
limitations to seek consumer redress for TSR violations is three years 
under Section 19 of the FTC Act,\202\ the applicable statute of 
limitations for civil penalties is five years under Section 5 of the 
FTC Act.\203\ As such, the Commission believes it is appropriate and 
necessary to require the retention of records for five years. This 
requirement is particularly important when, as EPIC has noted, not all 
companies will comply with a litigation hold request while an 
investigation is pending, potentially leaving law enforcement agencies 
with no recourse in enforcing the TSR.\204\
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    \202\ 15 U.S.C. 57b(d).
    \203\ 15 U.S.C. 45(m); 28 U.S.C. 2462; see also United States v. 
MyLife.com, Inc., 567 F. Supp. 3d 1152, 1166 (C.D. Cal. Oct. 19, 
2021) (holding the statute of limitations for civil penalties under 
the FTC Act is five years); United States v. Dish Network, LLC, 75 
F. Supp. 3d 942, 1004-05 (C.D. Ill. 2014) (holding the three-year 
statute of limitations in 15 U.S.C. 57b does not apply to claims for 
civil penalties under Section 5(m) of the FTC Act, and since Section 
5(m) is silent, the applicable statute of limitations is five years 
under 28 U.S.C. 2462). The statute of limitations for a private 
right of action under the Telemarketing Act is three years. 15 
U.S.C. 6104(a).
    \204\ EPIC 34-23 at 4-5.
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11. Section 310.5(b)--Format of Records
    The 2022 NPRM proposed modifying the formatting requirements to 
require records that include phone numbers comport with the 
International Telecommunications Union's Recommendation E.164 format 
for international phone numbers and North American Numbering plan for 
domestic phone numbers.\205\ For records that include time and call 
duration, the 2022 NPRM proposed industry keep these records to the 
closest whole second, and record times in Coordinated Universal Time 
(UTC). The Commission received two comments on this proposal. Both 
commenters support the amendments, but also requested clarifications or 
modifications.
---------------------------------------------------------------------------

    \205\ 2022 NPRM, 87 FR at 33687.
---------------------------------------------------------------------------

    PACE asked the Commission to clarify that the new amendments 
requiring that time be kept in UTC format applies only to new records 
moving forward.\206\ It also requested the Commission allow businesses 
a reasonable time to implement the proposed changes since it may 
require reprogramming software and IT systems.\207\ The Commission 
clarifies that the new formatting requirements apply only to new 
records created after the proposed amendments go into effect. 
Additionally, as stated in Section III.A.2--Call Detail Records, the 
Commission will allow sellers and telemarketers a one hundred eighty-
day grace period to implement any new systems, software, or procedures 
necessary to comply with that new provision. The Commission believes 
that should provide companies sufficient time to reprogram any software 
systems necessary to also comport with the new formatting requirements.
---------------------------------------------------------------------------

    \206\ PACE 33-15 at 5.
    \207\ Id.
---------------------------------------------------------------------------

    EPIC requests the Commission require companies to maintain records 
in a format that is easily retrievable and inexpensive to produce and 
make clear the regulated party is responsible for the cost of producing 
the records.\208\ EPIC also requests the Commission impose more 
specific formatting requirements and require telemarketers and sellers 
to keep their records in a format that ``is commonly used to work with 
large data sets'' and ``easily readable'' such as ``separate columns 
for separate data points rather than every data point within the same 
single data field.'' \209\ The Commission considered EPIC's suggestions 
and declines to impose more specific formatting requirements. 
Technology is advancing at such a rapid pace that the Commission is 
concerned more specific formatting requirements might become obsolete 
in the future. Moreover, in the Commission's experience, companies that 
use technologies such as an autodialer to make telemarketing calls 
rather than manual means typically retain records of those calls in an 
easily retrievable format. The Commission believes allowing companies 
to retain records as they would in the ordinary course of business 
strikes an appropriate balance between law enforcement's interest in 
obtaining the information necessary to enforce the TSR and industry's 
concerns

[[Page 26774]]

about burden. Finally, the Commission does not believe it is 
appropriate to require sellers and telemarketers to affirmatively bear 
the cost of producing records to private litigants regardless of the 
outcome of their suits as EPIC requests,\210\ when Congress already 
included a provision in the Telemarketing Act that allows a court to 
award the cost of the suit and any reasonable attorney or expert 
witness fees to the prevailing party.\211\
---------------------------------------------------------------------------

    \208\ EPIC 34-23 at 13.
    \209\ Id.
    \210\ Id.
    \211\ 15 U.S.C. 6104(d).
---------------------------------------------------------------------------

12. Section 310.5(c)--Violation of Recordkeeping Provisions
    The 2022 NPRM proposed clarifying that the failure to keep each 
record required by Section 310.5 in a complete and accurate manner 
constitutes a violation of the TSR.\212\ The Commission received five 
comments on this proposal. EPIC and NAAG support the proposal, stating 
it is a ``common-sense approach in deterring deceptive telemarketers/
sellers from harming consumers'' \213\ and ``inaccurate or incomplete 
records are of little use.'' \214\ PACE also supports the proposed 
clarification, stating the proposal is ``logical and in line with the 
spirit of the TSR and its accompanying legislation.'' \215\ But PACE 
raised concerns about the requirement that records be kept in an 
accurate and complete manner, arguing that companies who fail to keep 
all or some records in a complete and accurate manner through 
inadvertent error should not be penalized in the same way as 
telemarketers and sellers who fail to keep all or some categories of 
records.\216\ Instead, PACE urges leniency for situations where the 
failure is inadvertent rather than willful and requests the Commission 
provide ``a 30-day cure period when the alleged violation can be easily 
corrected.'' \217\
---------------------------------------------------------------------------

    \212\ 2022 NPRM, 87 FR 33687.
    \213\ NAAG 34-20 at 10.
    \214\ EPIC 34-23 at 5.
    \215\ PACE 33-15 at 6.
    \216\ Id.
    \217\ Id. PACE also cites to the example NFIB provided in its 
comment as an example of why PACE believes the Commission should 
provide some leniency and an opportunity to cure rather than 
penalize inadvertent errors.
---------------------------------------------------------------------------

    NFIB and Sirius object to this proposal.\218\ Sirius proposes the 
Commission ``count violations by each type of record rather than by 
each record, as proposed.'' \219\ NFIB argues allowing civil penalties 
for ``each erroneous error'' is as ``perverse as the evil the FTC 
states it is addressing, for it would allow the FTC to put a seller or 
telemarketer out of business for a relatively minor mistake that 
affected many records.'' \220\ NFIB provides an example to illustrate 
its concerns describing a situation where a company ``made the 
relatively minor mistake of keeping calls in the time zone of the 
person called, rather than in Coordinated Universal Time (UTC) 
format.'' \221\ NFIB believes in this situation the company would be 
facing astronomically high fines for the hundreds of thousands of calls 
it makes a year.\222\ Instead, NFIB argues the FTC should provide a 
reasonable time period to cure these errors once discovered, such as 90 
days, and only commence imposing fines for each week after the 
reasonable period expires.\223\ According to NFIB, this would be a more 
balanced system that ``avoids both the extreme that a relatively minor 
design violation yields an astronomical fine that puts the seller or 
marketer out of business and the opposite extreme that a violation 
results in such a small fine that a seller or marketer accepts fines as 
an annoying but manageable cost of doing business.'' \224\
---------------------------------------------------------------------------

    \218\ NFIB 33-4 at 6-7; Sirius 34-18 at 8.
    \219\ Sirius 34-18 at 8.
    \220\ NFIB 33-4 at 7.
    \221\ Id.
    \222\ Id.
    \223\ Id.
    \224\ Id.
---------------------------------------------------------------------------

    The Commission recognizes NFIB's and PACE's concerns regarding 
inadvertent errors resulting in large penalties and, thus, included a 
safe harbor provision for call detail records in the proposed 
amendments. As discussed in Section III.A.13--Safe Harbor for 
Incomplete or Inaccurate Records Pursuant to Section 310.5(a)(2) below, 
the Commission believes it has provided a reasonable grace period for 
sellers and telemarketers to cure any inadvertent deficiencies in their 
recordkeeping system before any civil penalties might apply and the 
proposed example NFIB raises would fall squarely within the safe 
harbor, provided the company followed the other requirements of the 
safe harbor.
    Regarding Sirius's suggestion that failure to retain each type of 
record equal one violation, the Commission is not persuaded imposing 
civil penalties for each type of record would provide sufficient 
incentive for companies to abide by the recordkeeping provisions given 
the limited number of categories of records sellers and telemarketers 
are required to retain.\225\
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    \225\ Although Sirius did not provide a definition for what it 
meant by ``type of record,'' the Commission interprets it to mean 
the categories the Commission has outlined under the amended Section 
310.5(a), which would limit the number of categories to eleven.
---------------------------------------------------------------------------

13. Section 310.5(d)--Safe Harbor for Incomplete or Inaccurate Records 
Kept Pursuant to Section 310.5(a)(2)
    The Commission proposed including a safe harbor provision for 
temporary and inadvertent errors in keeping call detail records 
pursuant to Section 310.5(a)(2). Specifically, the 2022 NPRM stated a 
seller or telemarketer would not be liable for failing to keep records 
under Section 310.5(a)(2) if it can demonstrate that: (1) it 
established and implemented procedures to ensure completeness and 
accuracy of its records under Section 310.5(a)(2); (2) it trained its 
personnel in the procedures; (3) it monitors compliance and enforces 
the procedures, and documents its monitoring and enforcement 
activities; and (4) any failure to keep accurate or complete records 
under Section 310.5(a)(2) was temporary and inadvertent.\226\
---------------------------------------------------------------------------

    \226\ 2022 NPRM, 87 FR at 33687.
---------------------------------------------------------------------------

    The Commission received four comments on this proposal. PACE states 
a ``safe harbor for maintaining call detail records is necessary'' 
while Sirius states it would ``provide a good foundation for seller and 
telemarketer compliance plans.'' \227\ WPF states it does not ``object 
to the safe harbor proposed'' because it was ``narrow enough to allow 
companies to make the kinds of mistakes that occur in day to day 
business, and provides incentives to correct the errors.'' \228\
---------------------------------------------------------------------------

    \227\ PACE 33-15 at 6; Sirius 34-18 at 8.
    \228\ WPF 34-21 at 4.
---------------------------------------------------------------------------

    NFIB, however, states it does not deem the safe harbor sufficient 
because it is ``complex and limited'' and does not provide a ``great 
source of comfort to sellers and marketers in its current form.'' \229\ 
Because the safe harbor would apply in the scenario NFIB posits above 
where a company fails to keep call times in UTC format, the Commission 
believes the safe harbor provides adequate protection against 
inadvertent and temporary errors. The Commission, however, will revise 
this provision to provide sellers or telemarketers thirty days to cure 
an inadvertent error, as PACE suggests.\230\
---------------------------------------------------------------------------

    \229\ NFBI 33-4 at 8.
    \230\ PACE 33-15 at 6; see also Section III.A.12 (Violation of 
Recordkeeping Provisions which provides additional discussion about 
the proposed safe harbor).
---------------------------------------------------------------------------

14. Section 310.5(e)--Compliance Obligations
    The Commission proposed modifying the compliance obligations in 
Section 310.5(e) to state that, in the event the seller and 
telemarketer failed to allocate responsibility between themselves for

[[Page 26775]]

maintaining the required records, the responsibility for complying with 
the recordkeeping requirements would fall on both parties.\231\ The 
Commission received four comments on this proposal. NAAG, PACE, and 
Sirius supported the proposal.\232\ PACE states that ``not only do we 
consider this fair, but we believe it will encourage parties to 
negotiate their contracts and cease regarding TSR recordkeeping as an 
afterthought.'' \233\
---------------------------------------------------------------------------

    \231\ 2022 NPRM, 87 FR at 33687.
    \232\ NAAG 34-20 at 10; PACE 33-15 at 6; Sirius 34-18 at 8.
    \233\ PACE 33-15 at 6.
---------------------------------------------------------------------------

    EPIC, however, objects to this amendment and strongly urges the 
Commission to require both telemarketers and sellers to retain records 
rather than allowing them to allocate responsibilities.\234\ 
Specifically, EPIC raises a concern that a seller may allocate 
responsibilities to a telemarketer that resides outside the United 
States and would not be subject to U.S. jurisdiction and process.\235\ 
EPIC argues that if the Commission is inclined to designate only one 
party, it should be the seller who is responsible because the seller 
should be accountable for the telemarketers it hires, is less likely to 
be overseas and undercapitalized compared to telemarketers, and likely 
receives most of the sales proceeds.\236\ But EPIC still believes the 
Commission should explicitly require both sellers and telemarketers be 
responsible for recordkeeping to prevent any gamesmanship where sellers 
move overseas to avoid liability.\237\ In the event the Commission is 
not persuaded, EPIC also argues the Commission should require sellers 
to audit their telemarketers, including reviewing an actual production 
of preserved records, and require sellers who hire overseas 
telemarketers to require those telemarketers to have a U.S.-based agent 
so their records would be subject to U.S. jurisdiction and 
process.\238\
---------------------------------------------------------------------------

    \234\ EPIC 34-23 at 8-10.
    \235\ Id at 10.
    \236\ Id.
    \237\ Id.
    \238\ Id.
---------------------------------------------------------------------------

    The Commission shares EPIC's concerns regarding gamesmanship and 
the challenges of obtaining records from overseas entities. The 
Commission is also concerned about sellers hiring unscrupulous 
telemarketers and disclaiming any responsibility for recordkeeping by 
allocating the responsibility to those telemarketers. The Commission 
notes that under the proposed amendment, sellers who allocate 
recordkeeping responsibilities to their telemarketers would be required 
to ``establish and implement practices and procedure to ensure the 
telemarketer is complying with the [TSR's recordkeeping provisions].'' 
\239\ But given the concerns EPIC has raised, the Commission will 
modify this provision to also require sellers who allocate 
recordkeeping responsibilities to their telemarketer to retain access 
rights to those records so the seller can produce responsive records in 
the event it has hired a telemarketer overseas. Requiring sellers to 
ensure their telemarketers are abiding by the TSR's recordkeeping 
provisions and retain access to their telemarketer's records of 
telemarketing activities on the seller's behalf should not impose 
onerous obligations, and such access may never be necessary. Sellers 
likely already take such steps in the ordinary course of business, 
given that telemarketers are acting as their agents and their 
telemarketers' violations of the TSR could also expose them to 
liability under the TSR.
---------------------------------------------------------------------------

    \239\ 2022 NPRM, 87 FR at 33694.
---------------------------------------------------------------------------

15. Authority To Require Recordkeeping
    NFIB argues the new recordkeeping proposals exceed the FTC's 
statutory authority under the Telemarketing Act.\240\ Section 6102(a) 
of the Telemarketing Act directs the Commission to: (1) prescribe rules 
prohibiting deceptive or abusive telemarketing acts or practices; \241\ 
(2) include in those rules a definition of deceptive acts or abusive 
practices that shall include fraudulent charitable solicitations and 
may include actions that constitute assisting or facilitating such as 
credit card laundering; \242\ and (3) include in those rules a specific 
list of abusive practices that govern patterns and timing of 
unsolicited calls, and disclosures of certain material information in 
sales or charity calls.\243\ It also states at the end of Section 
6102(a) that ``[i]n prescribing the rules described in this paragraph, 
the Commission shall also consider recordkeeping requirements.''
---------------------------------------------------------------------------

    \240\ NFIB 33-4 at 5-6.
    \241\ 15 U.S.C. 6102(a)(1).
    \242\ Id. 6102(a)(2).
    \243\ Id. 6102(a)(3).
---------------------------------------------------------------------------

    NFIB argues the directive to consider recordkeeping requirements 
applies only to the specific list of abusive practices under Section 
6102(a)(3) and, since the other paragraphs are silent as to 
recordkeeping, the Act affirmatively prohibits the FTC from requiring 
recordkeeping.\244\ The Commission does not agree. The language of the 
Act shows the directive to consider recordkeeping applies to the Act's 
mandate to promulgate rules addressing deceptive or abusive 
telemarketing practices and is not limited to the specific abusive 
practices identified in Section 6102(a)(3).
---------------------------------------------------------------------------

    \244\ NFIB 33-4 at 6.
---------------------------------------------------------------------------

    Section 6102(a) generally requires the Commission to promulgate 
rules regarding deceptive or abusive telemarketing acts or practices. 
Section 6102(a)(1) states: ``[t]he Commission shall prescribe rules 
prohibiting deceptive telemarketing acts or practices and other abusive 
telemarketing acts or practices.'' \245\ Sections 6102(a)(2) and (a)(3) 
then identify specific provisions that Congress instructs the 
Commission to include, or consider including, when it promulgates its 
rules under Section 6102(a)(1). Section 6102(a)(2) directs the 
Commission to ``include in such rules respecting deceptive 
telemarketing acts or practices'' a definition of deceptive 
telemarketing acts or practices, which may include, among other things, 
credit card laundering.\246\ Section 6102(a)(3) directs the Commission 
to ``include in such rules respecting other abusive telemarketing acts 
or practices'' specific requirements including: (1) ``a requirement 
that telemarketers may not undertake a pattern of unsolicited telephone 
calls which the reasonable consumer would consider coercive or abusive 
of such consumer's right to privacy''; (2) ``restrictions on the hours 
of the day and night when unsolicited telephone calls can be made to 
consumers''; (3) ``a requirement that any person engaged in 
telemarketing for the sale of goods or services'' make certain 
disclosures; and (4) ``a requirement that any person engaged in 
telemarketing for the solicitation of charitable contributions'' make 
certain disclosures.\247\ At the end of Section 6102(a)(3), in a 
separate unnumbered sentence, the Act states ``[i]n prescribing the 
rules described in this paragraph, the Commission shall also consider 
recordkeeping requirements.'' \248\ Thus, Congress directed the 
Commission to promulgate rules prohibiting deceptive or abusive 
telemarketing acts or practices under Section 6102(a)(1), and Sections 
6102(a)(2) and (a)(3) merely inform what types of acts or practices the 
Commission should include, or consider including, when it promulgates 
those rules.\249\
---------------------------------------------------------------------------

    \245\ 15 U.S.C. 6102(a)(1) (emphasis added).
    \246\ Id. 6102(a)(2) (emphasis added).
    \247\ Id. 6102(a)(3) (emphasis added).
    \248\ Id.
    \249\ The Commission also notes that the official codification 
of the Telemarketing Act in the United States Code aligns the 
indentation of the statement ``In prescribing the rules described in 
this paragraph, the Commission shall consider recordkeeping 
requirements'' with Section 6102(a) rather than with Section 
6102(a)(3). As such, it supports the Commission's position that the 
directive to consider recordkeeping refers generally to Section 
6102(a) and is not limited to the specific acts and practices listed 
in Section 6102(a)(3). See, e.g., https://www.govinfo.gov/content/pkg/USCODE-2011-title15/pdf/USCODE-2011-title15-chap87.pdf (last 
visited November 21, 2023).

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

[[Page 26776]]

    NFIB's interpretation of Section 6102(a)(3) improperly divorces 
that provision from the rest of the statute. As discussed, Section 
6102(a)(3) contains Congress's specific guidance regarding the types of 
rules the Commission must adopt or consider adopting to implement 
Section 6102(a)(1)'s general grant of authority to ban deceptive or 
abusive telemarketing practices. Section 6102(a)(3) states when the 
Commission ``prescrib[es] the rules described'' by Congress, it ``shall 
also consider recordkeeping requirements.'' This provision thus 
authorizes the Commission to adopt--or not adopt--recordkeeping 
requirements and declare violations of such requirements to be an 
abusive telemarketing practice.
    But even if Section 6102(a)(3) did not expressly authorize the 
Commission to consider recordkeeping requirements, the Commission may 
still require recordkeeping under Section 6102(a)(1). Congress's 
purpose in enacting the Telemarketing Act was to prevent deceptive or 
abusive telemarketing acts or practices.\250\ As the Commission has 
noted over the years, recordkeeping provisions prevent deceptive or 
abusive telemarketing acts or practices because they are necessary to 
effectively enforce the TSR.\251\ NFIB's assertion that ``the rules for 
recordkeeping do not prevent or address deceptive or other abusive 
telemarketing acts or practices'' is not an accurate assertion \252\ 
and it is undermined by the Commission's law enforcement experience and 
that of other enforcers.\253\
---------------------------------------------------------------------------

    \250\ H.R. Rep. No. 103-20, 103rd Cong., 1st Sess. (``House 
Report'') at 1; S. Rep. No. 103-80, 103rd Cong., 1st Sess. (``Senate 
Report'') at 1 (stating the purpose of the bill was ``to prevent 
fraudulent or harassing telemarketing practices'').
    \251\ Original TSR 60 FR at 43857; 2003 TSR Amendments, 68 FR at 
4653; 2014 TSR Rule Review, 79 FR at 46735.
    \252\ NFIB 33-4 at 5-6.
    \253\ See, e.g., NAAG 34-20 at 3-10.
---------------------------------------------------------------------------

    Even if Section 6102(a)(1) could be read as being silent on 
recordkeeping, that would not prohibit the Commission from including 
recordkeeping in any rules the Commission promulgates under this 
section of the Act. Rather, Congress directed the Commission to 
prescribe rules prohibiting deceptive telemarketing acts or practices 
and the Commission is granted authority to issue rules, including 
recordkeeping provisions, for any deceptive or abusive telemarketing 
acts or practices it identifies in promulgating the TSR.\254\ 
Congress's silence would make sense given the Commission had yet to 
identify these deceptive or abusive acts or practices in the TSR at the 
time the Telemarketing Act was passed, and it was unknown whether and 
what form of recordkeeping would be necessary to ensure 
compliance.\255\ Interpreting the Telemarketing Act to prohibit the 
Commission from requiring recordkeeping would contradict the Act's 
stated purpose--to ``enact legislation that will offer consumers 
necessary protection from telemarketing deception and abuse.'' \256\
---------------------------------------------------------------------------

    \254\ See. e.g., U.S. Sugar Corp. v. EPA, 830 F.3d 579, 617-18 
(D.C. Cir. 2016) (upholding EPA's authority to require recordkeeping 
in regulating even though Congress was silent on that issue because 
``Congress plainly intended EPA to regulate sources burning `any' 
solid waste, a goal presumably advanced by the recordkeeping 
presumption'').
    \255\ Congress has amended the Telemarketing Act numerous times 
over the years but made no changes to the recordkeeping provision. 
See, e.g., supra note 13. Given that the TSR has always included 
recordkeeping requirements since its inception in 1995 and the FTC 
has reported to Congress on its rulemaking efforts at various 
congressional hearings, Congress's silence on this issue can be 
interpreted as agreement with the FTC's statutory construction. See, 
e.g., Washington All. of Tech. Workers v. U.S. Dep't of Homeland 
Sec., 50 F.4th 164, 182 (D.C. Cir. 2022) (quoting Jackson v. Modly, 
949 F.3d 763, 772-73 (D.C. Cir. 2020)).
    \256\ 15 U.S.C. 6101(5). The Commission's position is also 
supported by the legislative history, which demonstrates that 
Congress intended for the Commission to consider recordkeeping 
requirements more broadly. See Senate Report at 7. The Senate Report 
references Section 3(a)(5) in an earlier version of the Act that 
directed the Commission to ``prescribe rules regarding telemarketing 
activities'' and in prescribing those rules to ``consider the 
inclusion of . . . (5) recordkeeping requirements.'' Telemarketing 
and Consumer Fraud and Abuse Prevention Act, S. 568, 103rd Cong. 
(1993). At minimum, this legislative history supports the position 
that the Commission may require recordkeeping for all abusive 
telemarketing acts or practices it identifies in promulgating the 
TSR and is not limited to those specific acts or practices listed in 
Section 6103(a)(3).
---------------------------------------------------------------------------

    Nothing in the text of the Act prevents the Commission from 
requiring persons to keep records substantiating their compliance with 
any requirement of the TSR. Nor does NFIB explain why Congress would 
have intended to deprive the Commission of records essential to the 
enforcement of the rule. NFIB's interpretation would give telemarketers 
and sellers a perverse incentive to commit deceptive and abusive 
practices while destroying any record of those violations.
    Finally, even if a court determines the Act only permits 
recordkeeping for rules that address the specific acts and practices 
listed in Section 6102(a)(3), the TSR's recordkeeping provisions meet 
those criteria. The Final Rule requires recordkeeping for eleven 
general categories of information: (1) advertisements, including 
telemarketing scripts and robocall recordings; (2) call detail records; 
(3) prize recipients; (4) customers; (5) customer information to 
establish a business relationship; (6) previous donors; (7) 
telemarketers' employees; (8) consent; (9) service providers; (10) 
entity-specific DNC; and (11) versions of the FTC's DNC. Each of these 
categories is necessary to ensure compliance with the provisions of the 
TSR the Commission promulgated to address the specifics acts or 
practices identified in Section 6102(a)(3).
    For example, Section 6102(a)(3)(A) of the Act requires the FTC to 
prohibit ``a pattern of unsolicited telephone calls which the 
reasonable consumer would consider coercive or abusive of such 
consumer's right to privacy.'' \257\ Accordingly, the Commission 
promulgated Section 310.4(b) of the TSR to prohibit certain ``patterns 
of calls,'' \258\ including prohibitions against robocalls, calls to 
consumers who have asked a specific seller to stop calling, and calls 
to consumers who have registered their phone numbers on the FTC's DNC 
Registry.\259\ As explained in more detail in Section II--Overview of 
the Proposed Amendments to the TSR above, the Commission needs all 
eleven categories of information set forth in the Final Rule, including 
the requirement that sellers and telemarketers retain call detail 
records to ensure compliance with these prohibitions.\260\
---------------------------------------------------------------------------

    \257\ 15 U.S.C. 6102(a)(3)(A).
    \258\ 16 CFR 310.4(b).
    \259\ 16 CFR 310.4(b)(1)(iii) and (b)(1)(v). See also Original 
TSR, 60 FR at 43854 (stating the entity-specific DNC provisions are 
intended to effectuate the requirements of Section 6102(a)(3)(A) of 
the Telemarketing Act); 2002 NPRM, 67 FR at 4518 (proposing the DNC 
Registry to ``fulfill the mandate in the Telemarketing Act that the 
Commission should prohibit telemarketers from undertaking `a pattern 
of unsolicited telephone calls which the reasonable consumer would 
consider coercive or abusive of such consumer's right to privacy''') 
(quoting 15 U.S.C. 6102(a)(3)(A)); 2006 Denial of Petition for 
Proposed Rulemaking, Revised Proposed Rule With Request for Public 
Comments, Revocation of Non-enforcement Policy, Proposed Rule 
(``2006 NPRM''), 73 FR 58716, 58726 (proposing adding an express 
prohibition against [robocalls] pursuant to Section 6102(a)(3)(A) of 
the Telemarketing Act).
    \260\ See supra Sections II.A (Recordkeeping) and II.C (New 
Definition for ``Previous Donor'').
---------------------------------------------------------------------------

    Similarly, Section 6102(a)(3)(B) of the Act requires the FTC to 
place restrictions on when telemarketers can make unsolicited calls, 
while Sections 6102(a)(3)(C) and (D) require the FTC to mandate certain 
disclosures. The FTC promulgated Section 310.4(c) of the TSR

[[Page 26777]]

to prohibit calls to a person's residence outside of certain hours and 
Sections 310.4(d) and (e) to require telemarketers to disclose the 
identity of the seller or charity, the purpose of the call, the nature 
of the good or service being sold, and that no purchase is required to 
win a prize or participate in a prize promotion. The TSR's existing and 
amended recordkeeping requirements are necessary to ensure compliance 
with these provisions of the TSR. For example, call detail records are 
needed to ensure telemarketers abide by the call time restrictions, 
while the requirements to retain records of advertisements, 
telemarketing scripts, robocalls, consent, customers, prize recipients, 
and call details regarding the content of the call are required to 
determine whether a telemarketer has made the necessary disclosures.

B. Modification of the B2B Exemption

    The 2022 NPRM proposed narrowing the B2B exemption to require B2B 
telemarketing calls to comply with Section 310.3(a)(2)'s prohibition on 
misrepresentations and Section 310.3(a)(4)'s prohibition on false or 
misleading statements.\261\ The Commission received twelve comments on 
this proposal.\262\ Rapid Financial Services, LLC and Small Business 
Financial Solutions, LLC (collectively, ``Rapid Finance''), EPIC, NAAG, 
USTelecom--The Broadband Association (``USTelecom''), WPF, and three 
anonymous commenters all support the proposal.\263\ EPIC strongly 
supports the proposal, stating ``there is no reason to believe that 
phone-based attempts to exploit small business victims have diminished 
since the pandemic began.'' \264\ NAAG states ``misrepresentations and 
false or misleading statements, in any form, are harmful to trade and 
commerce in general.'' \265\ WPF argues ``there is no downside to this 
particular update--the FTC Act already prohibits such activity.'' \266\ 
The anonymous commenters expressed concern over the harm that 
businesses suffer from deceptive telemarketing.\267\
---------------------------------------------------------------------------

    \261\ 2022 NPRM, 87 FR at 33687.
    \262\ The Commission received an additional ten comments 
addressing whether the Commission should generally repeal the B2B 
exemption in its entirety. The Commission addresses those comments 
in the 2024 NPRM, issued this same day.
    \263\ Anonymous 34-11, 33-11, and 33-13; EPIC 34-23 at 17; NAAG 
34-20 at 10; Rapid Finance 34-17 at 3; USTelecom 33-14 at 3-4; WPF 
34-21 at 4.
    \264\ EPIC 34-23 at 17.
    \265\ NAAG 34-20 at 10.
    \266\ WPF 34-21 at 4.
    \267\ Anonymous 34-11, 33-11, and 33-13.
---------------------------------------------------------------------------

    USTelecom highlights small and medium-sized businesses (``SMBs''), 
in particular, ``can be disproportionately impacted by malicious B2B 
telemarketers'' and scammers primarily use phones as the primary means 
of contacting SMBs.\268\ USTelecom also argues bad actors hide behind 
the B2B exemption and other legal ambiguities to avoid accountability, 
citing to a particularly pernicious example of a high-volume B2B 
telemarketing robocall campaign purporting to sell services that help 
SMBs boost their companies' Google listing that tied up the business's 
phone lines.\269\
---------------------------------------------------------------------------

    \268\ USTelecom 33-14 at 3-4.
    \269\ Id.
---------------------------------------------------------------------------

    Rapid Finance states, as a general matter, it ``does not oppose, 
and indeed supports the application of the TSR to B2B calls to prohibit 
material misrepresentations and false or misleading statements in B2B 
telemarketing transactions, including prohibiting the specific 
misrepresentations listed in Section 310.3(a)(2).'' \270\ Rapid Finance 
explains its business customers are ``often the target of telemarketers 
seeking to peddle so-called debt settlement services to them.'' \271\
---------------------------------------------------------------------------

    \270\ Rapid Finance 34-17 at 3.
    \271\ Id. Rapid Finance also argues that the amendments will 
close the gap between how B2B sellers and B2B telemarketers are 
treated under the TSR. Id. at 6-7. Rapid Finance appears to be under 
the misimpression that the B2B exemption only applies to 
telemarketers and not to sellers. That is incorrect and the 
Commission clarifies that the exemption under Section 310.6(a)(7) 
applies to both sellers and telemarketers. The Commission also notes 
that Rapid Finance raised other issues that the Commission is not 
addressing because they are unrelated to the focus of this 
rulemaking. Id. at 6.
---------------------------------------------------------------------------

    NFIB, Revenue Based Finance Coalition (``RBFC''), Third Party 
Payment Processors Association (``TPPPA''), and PACE all object to this 
proposed amendment.\272\ RBFC argues amending the TSR to apply to 
deceptive B2B telemarketing would ``undermine the Supreme Court's 
interpretation of the FTC's authority to impose penalties,'' \273\ 
citing AMG Capital Management, LLC v. FTC.\274\ RBFC's arguments are 
inapposite because the Supreme Court's decision in AMG concerned the 
FTC's authority to obtain consumer redress under Section 13(b) of the 
FTC Act; \275\ the decision did not address or implicate the 
Commission's authority to promulgate rules under the Telemarketing Act.
---------------------------------------------------------------------------

    \272\ NFIB 33-4 at 8-12; RBFC 34-13 at 1-4; TPPPA 34-14 at 2; 
PACE 33-15 at 7-9.
    \273\ RBFC 34-13 at 3.
    \274\ AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341 (2021).
    \275\ 15 U.S.C. 53(b).
---------------------------------------------------------------------------

    PACE and NFIB argue applying the TSR to B2B telemarketing exceeds 
the scope of the FTC's authority under the Telemarketing Act.\276\ They 
claim the Telemarketing Act is limited to consumer harm because of its 
``consistent use of consumer-oriented language'' and the focus on 
consumer harm in the statutory text and legislative history. \277\ PACE 
also argues the Telemarketing Act's directive for the Commission to 
identify deceptive telemarketing practices is also limited to consumer 
harm, because the Commission itself has historically conceptualized 
deception from a consumer perspective in its policy statements.\278\
---------------------------------------------------------------------------

    \276\ NFIB 33-4 at 11; PACE 33-15 at 7-9.
    \277\ PACE 33-15 at 8; see also NFIB 33-4 at 11 (arguing all 
five findings in the Telemarketing Act reference consumer harm and 
not harm to businesses).
    \278\ PACE 33-15 at 7-9. NFIB raises separate objections to 
repealing the B2B exemption based on changing market forces 
described in the Commission's 2022 ANPR. NFIB 33-4 at 9-10. As 
explained in the 2024 NPRM that the Commission is issuing 
concurrently with this Final Rule, the Commission declined to move 
forward with narrowing the B2B exemption as proposed in the 2022 
ANPR. As such, the Commission will not address NFIB's argument here 
since it is not applicable in requiring B2B telemarketing to comply 
with the TSR's misrepresentation provisions.
---------------------------------------------------------------------------

    The Commission disagrees. The Telemarketing Act directs the FTC to 
promulgate a rule that addresses deceptive and abusive telemarketing 
practices which, in the Commission's law enforcement experience, 
includes B2B telemarketing. The language of the Act supports the 
Commission's position.
    First, the Act defines ``telemarketing,'' as ``a plan, program, or 
campaign which is conducted to induce purchases of goods or services . 
. ., by use of one or more telephones and which involves more than one 
interstate telephone call.'' \279\ The Act exempts from the definition 
of telemarketing ``the solicitation of sales through the mailing of a 
catalog'' which meet certain criteria and ``where the person making the 
solicitation does not solicit customers by telephone but only receives 
calls initiated by customers in response to the catalog during those 
calls. . . .'' \280\ The Act only specifies that ``telemarketing'' must 
involve the use of one interstate telephone call but does not identify 
who must participate in the call. To the extent it identifies any 
participant, it uses the term customers, which includes 
businesses.\281\
---------------------------------------------------------------------------

    \279\ 15 U.S.C. 6106(4).
    \280\ 15 U.S.C. 6106(4) (emphasis added).
    \281\ See, e.g., Customer, Merriam-Webster Dictionary, available 
at https://www.merriam-webster.com/dictionary/customer (last visited 
Feb. 1, 2024) (defining customer as ``one that purchases a commodity 
or service'').
---------------------------------------------------------------------------

    Second, Section 6102(a)(1) directs the Commission to ``prescribe 
rules

[[Page 26778]]

prohibiting deceptive telemarketing acts or practices and other abusive 
telemarketing acts or practices.'' \282\ Section 6102(a)(2) directs the 
Commission to include in its rules ``a definition of deceptive 
telemarketing acts or practices which shall include fraudulent 
charitable solicitations, and which may include acts or practices of 
entities or individuals that assist or facilitate deceptive 
telemarketing, including credit card laundering.'' \283\ Congress used 
broad language, similar to the language of the FTC Act, in directing 
the FTC to promulgate a rule. The Act does not limit the scope of the 
rule promulgated under the Act to telemarketing that harms natural 
persons. Nor does the Act prohibit applying the rule to telemarketing 
that harms businesses or other organizations.
---------------------------------------------------------------------------

    \282\ 15 U.S.C. 6102(a)(1).
    \283\ 15 U.S.C. 6102(a)(2).
---------------------------------------------------------------------------

    Third, Sections 6102(a)(3)(C) and (D) direct the Commission to 
require ``any person engaged in telemarketing'' to ``promptly and 
clearly disclose to the person receiving the call the purpose of the 
call is to'' sell a good or service or solicit a charitable 
solicitation.\284\ Once again, Congress did not specify that the 
disclosure must be made to a natural person rather than a business. It 
simply specified that the disclosure be made to the person who received 
the call.
---------------------------------------------------------------------------

    \284\ 15 U.S.C. 6102(a)(3)(C) and (D) (emphasis added).
---------------------------------------------------------------------------

    Although PACE and NFIB argue the Commission's authority is limited 
to addressing deceptive or abusive telemarketing practices that harm 
natural persons because of the Act's liberal use of the term 
``consumer,'' \285\ none of the Act's provisions described above uses 
the word ``consumer.'' Moreover, the Act never defines the term 
``consumer.'' Given the Act's broad language, the most logical reading 
of the term ``consumer'' is that it encompasses all--including 
businesses--who consume a product or service.
---------------------------------------------------------------------------

    \285\ NFIB 33-4 at 11; PACE 33-15 at 7-9.
---------------------------------------------------------------------------

    The absence of a definition is notable when Congress has defined 
``consumer'' in other contexts, such as when it enacted the Magnuson-
Moss Warranty--Federal Trade Commission Improvement Act in 1975 
(``Magnuson-Moss'').\286\ Under Title I of Magnuson-Moss, which 
extended the Commission's jurisdiction over consumer product 
warranties, Congress narrowly defined ``consumer'' to mean a buyer of 
any ``consumer product'' which is ``normally used for personal, family, 
or household purposes.'' \287\ Congress also clarified that the narrow 
definition of consumer was limited to Title I of the Magnuson-Moss Act 
and did not apply to Title II, which among other things, codified the 
FTC's ability to seek consumer redress by filing civil actions in 
Federal court.\288\ Under Title II, Congress stated the term 
``consumer'' in the FTC Act should still be construed broadly without 
the limitations imposed in section 101(3) of title I of S. 356.\289\ 
Here, no such definition exists. If Congress had intended to limit the 
scope of the Telemarketing Act to those acts and practices directed at 
individuals rather than businesses, it would have done so.
---------------------------------------------------------------------------

    \286\ Title I of that legislation created the Magnuson-Moss 
Warranty Act (``Magnuson-Moss''), Public Law 93-637 (1975) (codified 
as amended at 15 U.S.C. 2301), extending Commission jurisdiction 
over consumer product warranties. Title II, separately known as the 
Federal Trade Commission Improvement Act (``FTCIA''), modernized the 
FTC Act by expanding the Commission's anti-fraud powers, including 
power to ``redress consumer injury resulting from violations of the 
[FTC Act]'' by filing civil actions in district court. S. Rep. No. 
93-151, at 3 (1973). Public Law 93-637; Public Law 93-153. p. 2533 
(1975) (codified as amended at 15 U.S.C. 45 et seq.).
    \287\ 15 U.S.C. 2103(1) and (3).
    \288\ See supra note 286.
    \289\ S. Rep. No. 93-151, at 27.
---------------------------------------------------------------------------

    The Commission's position is also supported by the legislative 
history. A Senate Report on the Act explained that, in directing the 
Commission to define ``fraudulent telemarketing acts or practices'' in 
its rulemaking, that Congress intended the rule ``to encompass the 
types of unlawful activities that are currently being addressed by the 
both the FTC and the States in their telemarketing cases.'' \290\ The 
Report also stated Congress intends the ``rule to be flexible enough to 
encompass the changing nature of [fraudulent telemarketing] activity 
while at the same time providing telemarketers with guidance as to the 
general nature of prohibited conduct.'' \291\ At the time the 
Telemarketing Act was passed, the Commission's law enforcement 
experience included cases against deceptive B2B telemarketing.\292\ In 
promulgating the original TSR, the Commission considered exempting all 
B2B telemarketing but stated, given its ``extensive enforcement 
experience pertaining to deceptive telemarketing directed to 
businesses,'' it did not believe ``an across-the-board exemption for 
business-to-business contacts is appropriate.'' \293\ Instead, the 
original TSR excluded from the B2B exemption telemarketing schemes that 
sell nondurable office or cleaning supplies because, in the 
Commission's law enforcement experience, these B2B schemes ``have been 
by far the most significant business-to-business problem area [that] 
such telemarketing falls within the Commission's definition of 
deceptive telemarketing acts or practices.'' \294\ The Commission also 
stated it would reconsider the scope of the B2B exemption ``if 
additional business-to-business telemarketing activities become 
problems after the Final Rule has been in effect.'' \295\ Each time the 
Commission has considered applying the TSR to other B2B telemarketing, 
it has done so based on its law enforcement experience in keeping with 
Congress's directive.\296\
---------------------------------------------------------------------------

    \290\ Senate Report at 7.
    \291\ Id.
    \292\ See Prepared Statement of the Federal Trade Commission 
before the United States House of Representatives Committee on Small 
Business (Sept. 28, 1994) (detailing the Commission's law 
enforcement actions against telemarketers who have harmed small 
businesses).
    \293\ Original TSR, 60 FR at 43861-62.
    \294\ Id.
    \295\ Id. at 43862.
    \296\ 2022 NPRM, 87 FR at 33682-83. Although the Commission's 
law enforcement efforts have primarily focused on harms to small 
businesses, the Commission believes that the Telemarketing Act 
authorizes the Commission to apply the TSR to B2B telemarketing more 
broadly for the reasons stated here. Similar to the recordkeeping 
provision, the Commission notes that Congress has amended the 
Telemarketing Act numerous times but made no changes to prohibit the 
TSR's application to some B2B telemarketing. Congress's silence here 
can also be interpreted as agreement with the FTC's statutory 
construction. See supra note 255.
---------------------------------------------------------------------------

    But even if the term ``consumer'' is construed more narrowly to 
exclude businesses, the Act's language still supports the Commission's 
position that the Act allows it to regulate B2B telemarketing. First, 
one of the Act's findings states ``[c]onsumers and others are estimated 
to lose $40 billion a year in telemarketing fraud.'' \297\ The 
legislative history makes clear Congress was concerned about 
telemarketing fraud against small businesses.\298\ Second, the Act uses 
broad language in the definition of telemarketing, in its directives to 
promulgate rules regarding deceptive or abusive telemarketing under 
Section 6102(a)(1), and in its directives of what to include in those 
rules under Sections 6102(a)(2), (a)(3)(C), and (a)(3)(D). These 
provisions do not contain any reference to a ``consumer.'' \299\ If 
Congress intended to construe consumer narrowly, Congress's omission of 
the term consumer from

[[Page 26779]]

these provisions of the Act demonstrates Congress did not intend to 
limit the TSR to telemarketing that harms only individual consumers.
---------------------------------------------------------------------------

    \297\ 15 U.S.C. 6101(3) (emphasis added).
    \298\ The legislative history supports the Commission's position 
that, even assuming a narrower definition of consumer, the 
Telemarketing Act allows the Commission to regulate B2B 
telemarketing. The Senate Report on the Act explains that 
telemarketing fraud ``affects a cross section of Americans, 
including small business.'' Senate Report at 2.
    \299\ 15 U.S.C. 6102(a) and 6106(4).
---------------------------------------------------------------------------

    Finally, RBFC and TPPPA make general objections that prohibiting 
misrepresentations in B2B telemarketing is unnecessary; that it would 
``unduly burden legitimate business activities''; \300\ and would not 
provide small businesses any additional protections when the FTC has 
authority already to pursue bad actors that harm businesses under the 
FTC Act.\301\ RBFC also argues if the Commission were to prohibit 
misrepresentations in B2B telemarketing, it should only do so in the 
areas where there is a history of deception such as the top five scams 
identified in the Better Business Bureau's research report issued in 
2018.\302\
---------------------------------------------------------------------------

    \300\ TPPPA 34-14 at 2.
    \301\ RBFC 34-13 at 2-3.
    \302\ RBFC 34-13 at 3; see also Better Business Bureau, Scams 
and Your Small Business Research Report, at 7-8 (2018), available at 
https://www.bbb.org/content/dam/bbb-institute-(bbbi)/files-to-save/
bbb_smallbizscamsreport-final-06-18.pdf (last visited Dec. 11, 
2023). RBFC argues that any application of the TSR should be limited 
to the BBB's top five scams impacting small businesses including: 
``(1) bank/credit card company imposters, (2) directory listing and 
advertising services; (3) fake invoice/supplier bills; (4) fake 
checks; and (5) tech support scams.'' RBFC 34-13 at 3.
---------------------------------------------------------------------------

    The Commission is not persuaded by these arguments. The Commission 
notes that requiring B2B telemarketers to comply with the TSR's 
prohibitions against misrepresentations would provide the Commission 
with additional tools to obtain monetary redress for those harmed by 
illegal telemarketing and civil penalties against bad actors who 
violate the law, creating a deterrent effect. Importantly, the proposed 
amendment refrains from imposing any burdens on B2B sellers and 
telemarketers, including recordkeeping requirements. And, as commenters 
have noted, because businesses must already comply with the FTC Act, 
which prohibits deceptive or unfair conduct, complying with the TSR 
should not create significant burden.\303\ The Commission also does not 
believe it should limit the prohibition against misrepresentations to 
just the five top scams identified in the BBB's 2018 report. The 
Commission has monitored deceptive telemarketing impacting small 
businesses since 1995 and has observed not only the increase in 
deceptive telemarketing but how easily scammers shift tactics and 
peddle different products or services to small businesses.\304\ Given 
the Commission's extensive law enforcement experience in B2B 
telemarketing cases--including schemes involving deceptive business 
directory listings, web hosting or design, search engine optimization 
services, and government impersonators \305\--the Commission believes 
applying the TSR's prohibitions against misrepresentations in Section 
310.3(a)(2) and 310.3(a)(4) is appropriate.
---------------------------------------------------------------------------

    \303\ RBFC 34-13 at 2-3; WPF 34-21 at 4.
    \304\ See Section II.B (B2B Telemarketing).
    \305\ Id.
---------------------------------------------------------------------------

C. New Definition of ``Previous Donor''

    The 2022 NPRM proposed adding a new definition for the term 
``previous donor'' to identify consumers who have donated to a 
particular charity within the two-year period immediately preceding the 
date the consumer receives a robocall on behalf of that charity.\306\ 
The Commission proposed including this new definition to make clear 
that telemarketers are allowed to place charity robocalls only to 
consumers who have previously donated to that charity within the last 
two years.\307\
---------------------------------------------------------------------------

    \306\ 2022 NPRM, 87 FR at 33687-88.
    \307\ To qualify for this narrow exemption, telemarketers must 
also comply with the provisions of Section 310.4(b)(1)(v)(B).
---------------------------------------------------------------------------

    The Commission received three comments on the new definition. WPF 
supports the new definition, stating it would ``clarify the exemption 
for charitable donations'' and ``effectively close what has been a 
fairly significant loophole.'' \308\ EPIC also supports the new 
definition and the clarification that the robocall exemption only 
applies to consumers who have previously donated to the soliciting 
charity, but it also urges the Commission to emphasize the limited 
scope of this exemption from the general prohibition against 
robocalls.\309\ One anonymous commenter objected to this new 
definition, arguing there should not be an exemption to place robocalls 
to prior donors in the first place.\310\
---------------------------------------------------------------------------

    \308\ WPF 34-21 at 1.
    \309\ EPIC 34-23 at 16.
    \310\ Anonymous 34-7.
---------------------------------------------------------------------------

    The Commission emphasizes the exemption to allow a telemarketer to 
place charity robocalls is narrow in scope and amending the TSR to add 
a new definition of ``previous donor'' will ensure the exemption 
remains narrow. The Commission understands some consumers do not want 
to receive any robocalls, including from charities they have supported 
through a donation. In such cases, the Commission notes that a consumer 
who does not want to receive such robocalls may request to be added to 
that charity's do-not-call list. If the consumer has done so, the 
exemption to place robocalls does not apply and it is a violation of 
the TSR for a telemarketer to place robocalls to the consumer on behalf 
of that charity.\311\
---------------------------------------------------------------------------

    \311\ See Section 310.4(b)(1)(v)(B)(iii) (requiring sellers and 
telemarketers to comply with all other requirements of this part, 
which include the entity-specific do not call provisions).
---------------------------------------------------------------------------

D. Corrections to the Rule

    In the 2022 NPRM, the Commission proposed the following five 
corrections to the Rule:
     In all instances where Sections 310.6(b)(1), (b)(2), and 
(b)(3) cross-reference Sections 310.4(a)(1), (a)(7), (b), and (c), 
change these citations so that they cross-reference Sections 
310.4(a)(1), (a)(8), (b), and (c).
     Modifying the time requirements in the definition of EBR 
from months to days as follows:
    [cir] Changing the time requirement to qualify for EBR in Section 
310.2(q)(1) from 18 months between the date of the telephone call and 
financial transaction to 540 days.
    [cir] Changing the time requirement to qualify for EBR in Section 
310.2(q)(2) from three months between the date of the telephone call 
and the date of the consumer's inquiry or application to 90 days.
     Adding an email address to Section 310.7 for State 
officials or private litigants to provide notice to the Commission that 
they intend to bring an action under the Telemarketing Act.
     Amending Section 310.5(a)(7) so it is consistent in form 
with the new proposed additions to Section 310.5(a).
     Amending Section 310.5(f) to remove an extraneous 
word.\312\
---------------------------------------------------------------------------

    \312\ 2022 NPRM, 87 FR at 33688.
---------------------------------------------------------------------------

    The Commission did not receive any comments on the proposed 
modifications and will implement the amendments as proposed.
    The Commission will also make the following additional non-
substantive modifications to the Rule:
     Change all references in the TSR from ``this Rule'' to 
``this part.''
     Renumber the footnotes in the TSR so the first footnote 
starts at one.
    Finally, as described in Section III.B--Modification of the B2B 
Exemption, some commenters did not understand the term ``consumer'' 
includes businesses. To address any confusion, the Commission will 
change references to ``consumer'' in the amendments of the 
recordkeeping requirements and definition of EBR to the defined term 
``person.'' \313\ The Commission will also modify the references to 
``consumer'' and ``business'' in the new recordkeeping requirement to 
retain call

[[Page 26780]]

detail records in Section 310.5(a)(2)(iv) to ``individual consumer'' 
and ``business consumer.'' While these modifications do not 
substantively alter the scope or application of the TSR, the Commission 
believes they will resolve any remaining uncertainty.
---------------------------------------------------------------------------

    \313\ 310 CFR 310.2(y).
---------------------------------------------------------------------------

IV. Paperwork Reduction Act

    The current Rule contains various provisions that constitute 
information collection requirements as defined by 5 CFR 1320.3(c), the 
definitional provision within the Office of Management and Budget 
(``OMB'') regulations implementing the Paperwork Reduction Act (PRA). 
44 U.S.C. chapter 35. OMB has approved the Rule's existing information 
collection requirements through October 31, 2025.\314\ The 2022 NPRM's 
proposed amendments made changes in the Rule's recordkeeping 
requirements that increased the PRA burden as detailed below.\315\ 
Accordingly, FTC staff submitted the 2022 NPRM and the associated 
Supporting Statement to OMB for review under the PRA.\316\ On June 16, 
2022, OMB directed the FTC to resubmit its request when the proposed 
rule is finalized.\317\
---------------------------------------------------------------------------

    \314\ OMB Control No: 3084-0097, ICR Reference No: 202208-3084-
001, available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202208-3084-001 (last visited Dec. 11, 2023).
    \315\ 2022 NPRM, 87 FR at 33690-91.
    \316\ This PRA analysis focuses only on the information 
collection requirements created by or otherwise affected by these 
now final rule amendments.
    \317\ See OMB Control No. 3084-0097, ICR Reference 202204-3084-
004, Notice of Office of Management and Budget Action (June 16, 
2022).
---------------------------------------------------------------------------

    None of the public comments submitted addressed the estimated PRA 
burden included in the 2022 NPRM, but some commenters did raise general 
burden concerns.\318\ Other commenters concurred that sellers and 
telemarketers likely retained the required records in the ordinary 
course of business and that the cost of electronic storage is 
decreasing.\319\ The Commission's responses to those concerns are set 
forth in more detail in Section III--Final Amended Rule, and in some 
instances the Commission made modifications to the proposed rule to 
address the concerns and reduce the estimated PRA burden.
---------------------------------------------------------------------------

    \318\ See, e.g., ECAC 34-22 at 3; NFIB 33-4 at 4-5; Sirius 34-18 
at 7-8.
    \319\ See, e.g., NAAG 34-20 at 9; PACE 33-15 at 2-5.
---------------------------------------------------------------------------

    The Final Rule contains new recordkeeping requirements and 
modifications to existing recordkeeping requirements. The new 
recordkeeping provisions require sellers or telemarketers to retain: 
(1) a copy of each unique prerecorded message; (2) call detail records 
of telemarketing campaigns; (3) records sufficient to show a seller has 
an established business relationship with a consumer; (4) records 
sufficient to show a consumer is a previous donor to a particular 
charitable organization; (5) records regarding the service providers 
that a telemarketer uses to deliver outbound calls; (6) records of a 
seller or charitable organization's entity-specific do-not-call 
registries; and (7) records of which version of the Commission's DNC 
Registry were used to ensure compliance with this Rule. The Final Rule 
modifies existing recordkeeping requirements by: (1) changing the time-
period for retaining records from two years to five years; \320\ (2) 
clarifying the records necessary for sellers or telemarketers to 
demonstrate that the person it is calling has consented to receive the 
call; and (3) specifying the format for records that include phone 
numbers, time, or call duration.
---------------------------------------------------------------------------

    \320\ As described above in Section II.A--Recordkeeping and in 
the 2022 NPRM, changing industry practice including increased 
spoofing of Caller ID information has made it more difficult to 
identify the telemarketers and sellers responsible for particular 
telemarketing campaigns and has hindered evidence gathering. As a 
result, two years is no longer always a sufficient amount of time 
for the Commission to fully complete its investigations of 
noncompliance and therefore the Commission is increasing the 
required retention period for recordkeeping under the Rule. Given 
the decreasing cost of data storage, the Commission does not believe 
that changing the length of time sellers and telemarketers are 
required to keep records will be unduly burdensome. 2022 NPRM, 87 FR 
at 33680-82, 33686.
---------------------------------------------------------------------------

    As explained above and in the 2022 NPRM,\321\ the Commission 
believes that for the most part, sellers and telemarketers already 
generate and retain these records either because the TSR already 
requires it or because they already do so in the ordinary course of 
business. For example, to comply with the TSR, sellers and 
telemarketers must already have a reliable method to identify whether 
they have a previous business relationship with a customer or whether 
the customer is a prior donor. They must also access the DNC Registry 
and maintain an entity-specific DNC registry. Moreover, sellers and 
telemarketers are also likely to keep records about their existing 
customers or donors and service providers in the ordinary course of 
business. The Final Rule now further requires telemarketers and sellers 
to keep call detail records of their telemarketing campaigns. 
Specifically, it requires sellers and telemarketers to keep call detail 
records of their telemarketing campaigns because in the Commission's 
experience, sellers and telemarketers use technologies that can easily 
generate these records. If a seller or telemarketer does not use such 
technology, however, and an individual telemarketer must manually enter 
a single telephone number to initiate a call to that number, then the 
seller or telemarketer does not need to retain records of the calling 
number, called number, date, time, duration and disposition of the 
telemarketing call under Sections 310.5(a)(2)(vii) and (x) of the Final 
Rule for those calls. The Commission made this modification to reduce 
the anticipated PRA burden for those sellers and telemarketers who 
manually place telemarketing calls. However, as a matter of caution, 
the Commission estimates the anticipated PRA burden will stay roughly 
the same as what was projected in 2022 NPRM, because that estimate was 
largely based on the use of automated mechanisms. Further, the 
Commission's enforcement of the Rule and review of the comments shows 
few sellers and telemarketers manually place telemarketing calls.\322\ 
Thus, the anticipated PRA burden could be significantly lower than the 
estimates set out below.
---------------------------------------------------------------------------

    \321\ 2022 NPRM, 87 FR at 33690-91.
    \322\ See, e.g., PACE 33-15 at 2.
---------------------------------------------------------------------------

A. Estimated Annual Hours Burden

    The Commission estimates the PRA burden of the Final Rule based on 
its knowledge of the telemarketing industry and data compiled from the 
Do Not Call Registry. In calendar year 2022, 10,804 telemarketing 
entities accessed the Do Not Call Registry; however, 549 were exempt 
entities obtaining access to data.\323\ Of the non-exempt entities, 
6,562 obtained data for a single State. Staff assumes these 6,562 
entities are operating solely intrastate, and thus would not be subject 
to the TSR. Therefore, Staff estimates approximately 3,693 
telemarketing entities (10,804--549 exempt--6,562 intrastate) are 
currently subject to the TSR. The Commission also estimates there will 
be 75 new entrants to the industry per year.
---------------------------------------------------------------------------

    \323\ See National Do not Call Registry Data Book for Fiscal 
Year 2022 (``Data Book''), available at https://www.ftc.gov/system/files/ftc_gov/pdf/DNC-Data-Book-2022.pdf (last visited Dec. 11, 
2023). An exempt entity is one that, although not subject to the 
TSR, voluntarily chooses to scrub its calling lists against the data 
in the Registry.
---------------------------------------------------------------------------

    The Commission has previously estimated that complying with the 
TSR's current recordkeeping requirements requires 100 hours for new 
entrants to develop recordkeeping systems that comply with the TSR and 
1 hour per year for established entities to file and store records 
after their systems are created, for a total annual

[[Page 26781]]

recordkeeping burden of 4,385 hours for established entities and 7,500 
hours for new entrants who must develop required record systems.\324\
---------------------------------------------------------------------------

    \324\ See Information Collection Activities; Proposed 
Collection; Comment Request 87 FR 23177 (Apr. 19, 2022).
---------------------------------------------------------------------------

    Because the Final Rule contains new recordkeeping requirements, the 
Commission anticipates that in the first year after the proposed 
amendments take effect, every entity subject to the TSR would need to 
ensure that their recordkeeping systems meet the new requirements. The 
Commission estimates this undertaking will take 50 hours. This includes 
10 hours to verify the entities are maintaining the required records, 
and 40 hours to create and retain call detail records. This yields an 
additional one-time burden of 184,650 hours for established entities 
(50 hours x 3,693 covered entities).
    For new entrants, the Commission estimates that the new 
requirements will increase their overall burden for establishing new 
recordkeeping systems by 50 hours per year. This yields a total added 
burden for new entrants of 3,750 hours (50 hours x 75 new entrants per 
year) in addition to what OMB has already approved.\325\
---------------------------------------------------------------------------

    \325\ See ``Recordkeeping for new entrants for live & 
prerecorded calls'' under IC (Information Collection) List, 
available at https://www.reginfo.gov/public/do/PRAViewIC?ref_nbr=202208-3084-001&icID=185985 (last visited Dec. 11, 
2023).
---------------------------------------------------------------------------

B. Estimated Annual Labor Costs

    The Commission estimates annual labor costs by applying appropriate 
hourly wage rates to the burden hours described above. The Commission 
estimates that established entities will employ skilled computer 
support specialists to modify their recordkeeping systems. Applying a 
skilled labor rate of $30.97/hour \326\ to the estimated 184,650 burden 
hours for established entities yields approximately $5,718,611 in one-
time labor costs during the first year after the amendments take 
effect.
---------------------------------------------------------------------------

    \326\ This figure is derived from the mean hourly wage shown for 
``Computer Support Specialist.'' See ``Occupational Employment and 
Wages-May 2022'' Bureau of Labor Statistics, U.S. Department of 
Labor, Last Modified April 25, 2023, Table 1 (``National employment 
and wage data from the Occupational Employment Statistics survey by 
occupation, May 2022'') available at https://www.bls.gov/news.release/pdf/ocwage.pdf (last visited October 24, 2023).
---------------------------------------------------------------------------

    As described above, the Commission estimates that with the Final 
Rule new entrants will spend approximately 50 additional hours per year 
to establish new recordkeeping systems. Applying a skilled labor rate 
of $30.97/hour to the estimated 3,750 burden hours for new entrants, 
the Commission estimates that the annual labor costs for new entrants 
would be approximately $116,138.

C. Estimated Non-Annual Labor Costs

    Staff previously estimated the non-labor costs to comply with the 
TSR's recordkeeping requirements were de minimis because most affected 
entities would maintain the required records in the ordinary course of 
business. Staff estimated that the recordkeeping requirements could 
require $50 per year in office supplies to comply with the Rule's 
recordkeeping requirements. Because the Final Rule requires retention 
of additional records, Staff estimates that these requirements will 
increase to $60 per year in office supplies on average for each of the 
3,768 covered entities per year in office supplies. This equates to 
roughly $226,080 in total for all covered entities.
    The new recordkeeping requirements also require entities to retain 
call detail records and audio recordings of prerecorded messages used 
in calls. Staff estimates the costs associated with preserving these 
records will also be de minimis. The Commission regularly obtains call 
detail records from voice providers when investigating potential TSR 
violations, and these records are kept in databases with small file 
sizes even when the database contains information about a substantial 
number of calls. For example, the Commission received a 2.9 gigabyte 
database that contained information about 56 million calls. The 
Commission also received a 1.2 gigabyte database that contained 
information about 5.5 million calls. Similarly, audio files of most 
prerecorded messages will not be very large because prerecorded 
messages are typically short in duration. Storing electronic data is 
very inexpensive. Electronic storage can cost $.74 per gigabyte for 
onsite storage including hardware, software, and personnel costs.\327\ 
Commercial cloud-based storage options are less expensive and can cost 
around $.20 per gigabyte per year.\328\ The Commission estimates the 
non-labor costs associated with electronically storing audio files of 
prerecorded messages and call detail records will cost around $5 a year 
on average for each of the 3,768 covered entities per year for 
electronic storage. This equates to roughly $18,840 in total for all 
covered entities.
---------------------------------------------------------------------------

    \327\ See Gartner, Inc. ``IT Key Metrics Data 2020: 
Infrastructure Measures--Storage Analysis.'' Gartner December 18, 
2019.
    \328\ Amazon's storage rate for S3 Standard--Infrequent Access 
storage is $0.0125 per GB per month. See https://aws.amazon.com/s3/pricing/?nc=sn&loc=4 (last visited Dec. 11, 2023); Google's storage 
rate for Archive Storage in parts of North America is $0.0012 per GB 
per month. See https://cloud.google.com/storage/pricing (last 
visited Dec. 11, 2023).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, requires that the 
Commission conduct an analysis of the anticipated economic impact of 
the proposed amendments on small entities.\329\ The RFA requires that 
the Commission provide an Initial Regulatory Flexibility Analysis 
(``IRFA'') with a proposed rule and a Final Regulatory Flexibility 
Analysis (``FRFA'') with the Final Rule unless the Commission certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities.\330\
---------------------------------------------------------------------------

    \329\ 5 U.S.C. 601-612.
    \330\ 5 U.S.C. 605.
---------------------------------------------------------------------------

    As discussed in the 2022 NPRM, the Commission did not believe the 
proposed amendment requiring additional recordkeeping would have a 
significant economic impact upon small entities, although it may affect 
a substantial number of small businesses.\331\ In the Commission's 
view, the proposed amendment would not significantly increase the costs 
of small entities that are sellers or telemarketers because the 
proposed amendments primarily require these entities to retain records 
that they are already generating and preserving in the ordinary course 
of business. The Commission also did not believe that the proposed 
amendments requiring small entities that are sellers or telemarketers 
to comply with the TSR's prohibitions on misrepresentations should 
impose any additional costs. Therefore, based on available information, 
the Commission certified that amending the Rule as proposed would not 
have a significant economic impact on a substantial number of small 
entities, and provided notice of that certification to the Small 
Business Administration (``SBA'').\332\
---------------------------------------------------------------------------

    \331\ 2022 NPRM, 87 FR at 33691-92.
    \332\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    Notwithstanding the certification, the Commission also published an 
IRFA in the 2022 NPRM and invited comment on the impact the proposed 
amendments would have on small entities covered by the Rule.\333\ The 
Commission did not receive any comments that provided empirical 
information on the burden the proposed amendments would have on small 
entities, but some commenters raised

[[Page 26782]]

general burden concerns, in particular with respect to the 
recordkeeping requirement that sellers and telemarketers retain call 
detail records.\334\ As discussed in more detail in Section III--Final 
Amended Rule, the Commission does not believe the Final Rule would 
impose significant additional burden since the recordkeeping amendments 
primarily require small entities that are sellers and telemarketers to 
retain records that they would keep in the ordinary course of business. 
The Commission also amended the Final Rule so that entities that do not 
utilize certain technology are not required to retain certain call 
detail records, to reduce the burden imposed on those entities.\335\ 
Finally, the FTC Act already requires sellers and telemarketers that 
are small entities to comply with the Final Rule's prohibition against 
misrepresentations in telemarketing. Thus, the Commission certifies 
that the Final Rule would not have a significant economic impact on a 
substantial number of small entities and provides notice of that 
certification to the Small Business Administration (``SBA'').\336\ The 
Commission has nonetheless deemed it appropriate as a matter of 
discretion to provide this FRFA.
---------------------------------------------------------------------------

    \333\ Id.
    \334\ See, e.g., NFIB 33-4 at 4-5; PACE 33-15 at 2.
    \335\ Supra Section III.A.2 (Call Detail Records).
    \336\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

A. Statement of the Need for, and Objectives of, the Rule

    The Final Rule requires telemarketers and sellers to maintain 
additional records regarding their telemarketing transactions. As 
described in the 2022 NPRM \337\ and in Section II--Overview of the 
Proposed Amendments to the TSR, the Final Rule updates the TSR's 
existing recordkeeping requirements so that the requirements comport 
with the substantial amendments to the TSR since the recordkeeping 
requirements were first made. The requirements are also necessary in 
light of the technological advancements that have made it easier and 
cheaper for unscrupulous telemarketers to engage in illegal 
telemarketing. The Final Rule also requires B2B telemarketers to comply 
with the TSR's prohibition on misrepresentations. These amendments are 
necessary to help protect businesses from deceptive telemarketing 
practices. The Final Rule also amends the definition of ``previous 
donor'' to clarify that a seller or telemarketer may not use 
prerecorded messages to solicit charitable donations on behalf of a 
charitable organization unless the recipient of the call previously 
donated to that charitable organization within the last two years.
---------------------------------------------------------------------------

    \337\ 2022 NPRM, 87 FR at 33678-84.
---------------------------------------------------------------------------

B. Issues Raised by Public Comments in Response to the IRFA

    As stated above, the Commission did not receive any comments 
relating to the IRFA or that provided empirical information on the 
burden the proposed amendments would have on small entities, but some 
commenters raised general burden concerns. The Commission details these 
concerns and its responses in more detail in Section III--Final Amended 
Rule.
    Commenters stated, in particular, that requiring retention of call 
detail records and each version of the DNC used for compliance would 
cause significant burden to businesses. Commenters also argued changing 
the time period to retain records from two years to five years would 
also impose additional burdens.
    To address concerns regarding the burden of retaining call detail 
records, the Final Rule provides an exemption for calls made by an 
individual telemarketer who manually enters a single telephone number 
to initiate those calls. For such calls, the seller or telemarketer 
does not need to retain records of the calling number, called number, 
date, time, duration, and disposition of the call. This modification 
should address burden concerns raised for small businesses which do not 
employ software or other technology to automate their telemarketing 
activity and still use manual operations.
    The Final Rule also provides a one hundred and eighty-day grace 
period from the date Section 310.5(a)(2)--which requires retention of 
call detail records--is published in the Federal Register so sellers 
and telemarketers can implement any new systems, software, or 
procedures necessary to comply with this new provision. This 
modification similarly should alleviate commenters' concerns regarding 
the time necessary to come into compliance.
    The Final Rule also modifies the recordkeeping requirement 
regarding DNC compliance and now requires records of which version of 
the DNC rather than each version used for compliance, significantly 
reducing the burden associated with this requirement. With respect to 
the time period to retain records, the Commission does not believe 
changing the time period to retain records would impose a significant 
burden because many businesses already retain the necessary records in 
the ordinary course of business.

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

    The Final Rule affects sellers and telemarketers engaged in 
``telemarketing,'' defined by the Rule to mean ``a plan, program, or 
campaign which is conducted to induce the purchase of goods or services 
or a charitable contribution, by use of one or more telephones and 
which involves more than one interstate telephone call.'' \338\ As 
noted above, staff estimate 3,693 telemarketing entities are currently 
subject to the TSR, and approximately 75 new entrants enter the market 
per year. For telemarketers, a small business is defined by the SBA as 
one whose average annual receipts do not exceed $25.5 million.\339\ 
Because virtually any business could be a seller under the TSR, it is 
not possible to identify average annual receipts that would make a 
seller a small business as defined by the SBA. Commission staff are 
unable to determine a precise estimate of how many sellers or 
telemarketers constitute small entities as defined by SBA. The 
Commission sought comment on this issue but did not receive any 
information from commenters.
---------------------------------------------------------------------------

    \338\ 16 CFR 310.2(dd). The Commission notes that, as mandated 
by the Telemarketing Act, the interstate telephone call requirement 
in the definition excludes small business sellers and the 
telemarketers which serve them in their local market area, but may 
not exclude some small business sellers and telemarketers in multi-
state metropolitan markets, such as Washington, DC.
    \339\ Telemarketers are typically classified as ``Telemarketing 
Bureaus and Other contact Centers,'' (NAICS Code 561422). See Table 
of Small Business Size Standards Matched to North American Industry 
Classification System Codes, available at https://www.sba.gov/sites/sbagov/files/2023-06/Table%20of%20Size%20Standards_Effective%20March%2017%2C%202023%20%282%29.pdf (last visited October 24, 2023).
---------------------------------------------------------------------------

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

    The Final Rule contains new recordkeeping requirements and 
modifications to existing recordkeeping requirements. The new 
recordkeeping requirements would require sellers or telemarketers to 
retain: (1) a copy of each unique prerecorded message; (2) call detail 
records of telemarketing campaigns; (3) records sufficient to show a 
seller has an established business relationship with a consumer; (4) 
records sufficient to show a consumer is a previous donor to a 
particular charitable organization; (5) records regarding the service 
providers that a telemarketer uses to deliver outbound calls; (6) 
records of a seller or charitable organization's entity-specific

[[Page 26783]]

do-not-call registries; and (7) records of which version of the 
Commission's DNC Registry that were used to ensure compliance with this 
Rule. The proposed modifications to the existing recordkeeping 
requirements would: (1) change the time period for retaining records 
from two years to five years; (2) clarify the records necessary for 
sellers or telemarketers to demonstrate that the person they are 
calling has consented to receive the call; and (3) specify the format 
for records that include phone numbers, time, or call duration. The 
small entities potentially covered by the proposed amendment will 
include all such entities subject to the Rule. The Commission has 
described the skills necessary to comply with these recordkeeping 
requirements in Section IV--Paperwork Reduction Act above.

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

    The Telephone Consumer Protection Act of 1991, 47 U.S.C. 227, and 
its implementing regulations, 47 CFR 64.1200 (collectively, ``TCPA'') 
contain recordkeeping requirements that may overlap with the 
recordkeeping requirements proposed by the new rule. For example, the 
proposed provision requiring sellers or telemarketers to keep a record 
of consumers who state they do not wish to receive any outbound calls 
made on behalf of a seller or telemarketer, 16 CFR 310.5(a)(10), 
overlaps to some degree with the TCPA's prohibition on a person or 
entity initiating a call for telemarketing unless such person or entity 
has procedures for maintaining lists of persons who request not to 
receive telemarketing calls including a requirement to record the 
request. The Final Rule's recordkeeping requirements do not conflict 
with the TCPA's recordkeeping requirements because sellers and 
telemarketers can comply with both sets of requirements simultaneously. 
Moreover, in the Commission's experience, the recordkeeping 
requirements under the TCPA do not lessen the need for the more robust 
recordkeeping requirements the Commission is proposing to further its 
law enforcement efforts. The Commission invited comment and information 
regarding any potentially duplicative, overlapping, or conflicting 
Federal statutes, rules, or policies and received one comment about a 
potential conflict.
    OCUL argues the Commission cannot proceed with the proposed 
amendments until the Federal Communications Commission (``FCC'') has 
clarified whether it will allow the establishment of a new code that 
will inform the telemarketer placing the call why its call was 
blocked.\340\ OCUL argues that this would lead to telemarketers and 
sellers being unable to keep complete or accurate records, subjecting 
them to violations, if they do not know why a call was blocked.\341\ 
The Commission does not see a conflict between the FCC's ongoing 
rulemaking and the proposed amendments in the 2022 NPRM. The Final Rule 
does not require the telemarketer or seller to retain records detailing 
why a call was blocked. Simply stating that a call was blocked as a 
record of the disposition of the call will suffice.
---------------------------------------------------------------------------

    \340\ OCUL 34-19 at 3.
    \341\ Id.
---------------------------------------------------------------------------

F. Description of Steps Taken To Minimize Significant Economic Impact, 
if any, on Small Entities, Including Alternatives

    The Commission has not proposed any specific small entity exemption 
or other significant alternatives to the proposed rule. The Commission 
has made every effort to avoid imposing unduly burdensome requirements 
on sellers and telemarketers by limiting the recordkeeping requirements 
to records that are both necessary for the Commission's law enforcement 
and typically already kept in the ordinary course of business. As 
detailed above in Sections III--Final Amended Rule and IV--Paperwork 
Reduction Act, the Commission has made additional modifications to the 
proposed amendments to further reduce the burden on small entities of 
complying with the Final Rule. These modifications include exempting 
sellers or telemarketers from retaining some call detail records for 
calls that are manually placed, and requiring sellers and telemarketers 
to retain records of which version of the FTC's DNC Registry they used 
rather than each version used for compliance.

VI. Incorporation by Reference

    Consistent with 5 U.S.C. 552(a) and 1 CFR part 51, the Final Rule 
incorporates the specifications of the following standard issued by the 
International Telecommunications Union: ITU-T E.164: Series E: Overall 
Network Operation, Telephone Service, Service Operation and Human 
Factors (published 11/2010). The E.164 standard establishes a common 
framework for how international telephone numbers should be arranged so 
that calls can be routed across telephone networks. Countries use this 
standard to establish their own international telephone number formats 
and ensure that those numbers have the information necessary to route 
telephone calls successfully between countries.
    This ITU standard is reasonably available to interested parties. 
The ITU provides free online public access to view read-only copies of 
the standard. The ITU website address for access to the standard is: 
https://www.itu.int/en/pages/default.aspx.

VII. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated these rule 
amendments as not a ``major rule,'' as defined by 5 U.S.C. 804(2).

List of Subjects in 16 CFR Part 310

    Advertising; Consumer protection; Incorporation by reference; 
Reporting and recordkeeping requirements; Telephone; Trade practices.

    For the reasons discussed in the preamble, the Federal Trade 
Commission amends title 16 of the Code of Federal Regulations, part 
310, as follows:

PART 310--TELEMARKETING SALES RULE

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

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

0
2. In Sec.  310.2,
0
a. Revise paragraph (q);
0
b. Redesignate paragraphs (aa) through (hh) as (bb) through (ii);
0
c. Add a new paragraph (aa).
    The revisions and addition read as follows:


Sec.  310.2   Definitions.

* * * * *
    (q) Established business relationship means a relationship between 
a seller and a person based on:
    (1) The person's purchase, rental, or lease of the seller's goods 
or services or a financial transaction between the person and seller, 
within the 540 days immediately preceding the date of a telemarketing 
call; or
    (2) The person's inquiry or application regarding a good or service 
offered by the seller, within the 90 days immediately preceding the 
date of a telemarketing call.
* * * * *
    (aa) Previous donor means any person who has made a charitable 
contribution to a particular charitable organization within the 2-year 
period immediately preceding the date of the telemarketing

[[Page 26784]]

call soliciting on behalf of that charitable organization.
* * * * *


Sec.  310.3   [Amended]

0
3. In Sec.  310.3, redesignate footnotes 659 through 663 as footnotes 1 
through 5.

0
4. In Sec.  310.4, revise paragraph (b)(2) and redesignate footnotes 
664 through 666 as footnotes 1 through 3 to read as follows:


Sec.  310.4   Abusive telemarketing acts or practices.

* * * * *
    (b) * * *
    (2) It is an abusive telemarketing act or practice and a violation 
of this part for any person to sell, rent, lease, purchase, or use any 
list established to comply with Sec.  310.4(b)(1)(iii)(A) or Sec.  
310.5, or maintained by the Commission pursuant to Sec.  
310.4(b)(1)(iii)(B), for any purpose except compliance with the 
provisions of this part or otherwise to prevent telephone calls to 
telephone numbers on such lists.
* * * * *

0
5. Revise Sec.  310.5 to read as follows:


Sec.  310.5   Recordkeeping requirements.

    (a) Any seller or telemarketer must keep, for a period of 5 years 
from the date the record is produced unless specified otherwise, the 
following records relating to its telemarketing activities:
    (1) A copy of each substantially different advertising, brochure, 
telemarketing script, and promotional material, and a copy of each 
unique prerecorded message. Such records must be kept for a period of 5 
years from the date that they are no longer used in telemarketing;
    (2) A record of each telemarketing call, which must include:
    (i) The telemarketer that placed or received the call;
    (ii) The seller or person for which the telemarketing call is 
placed or received;
    (iii) The good, service, or charitable purpose that is the subject 
of the telemarketing call;
    (iv) Whether the telemarketing call is to an individual consumer or 
a business consumer;
    (v) Whether the telemarketing call is an outbound telephone call;
    (vi) Whether the telemarketing call utilizes a prerecorded message;
    (vii) The calling number, called number, date, time, and duration 
of the telemarketing call;
    (viii) The telemarketing script(s) and prerecorded message, if any, 
used during the call;
    (ix) The caller identification telephone number, and if it is 
transmitted, the caller identification name that is transmitted in an 
outbound telephone call to the recipient of the call, and any contracts 
or other proof of authorization for the telemarketer to use that 
telephone number and name, and the time period for which such 
authorization or contract applies; and
    (x) The disposition of the call, including but not limited to, 
whether the call was answered, connected, dropped, or transferred. If 
the call was transferred, the record must also include the telephone 
number or IP address that the call was transferred to as well as the 
company name, if the call was transferred to a company different from 
the seller or telemarketer that placed the call; provided, however, 
that for calls that an individual telemarketer makes by manually 
entering a single telephone number to initiate the call to that number, 
a seller or telemarketer need not retain the records specified in 
paragraphs (a)(2)(vii) and (a)(2)(x) of this section.
    (3) For each prize recipient, a record of the name, last known 
telephone number, and last known physical or email address of that 
prize recipient, and the prize awarded for prizes that are represented, 
directly or by implication, to have a value of $25.00 or more;
    (4) For each customer, a record of the name, last known telephone 
number, and last known physical or email address of that customer, the 
goods or services purchased, the date such goods or services were 
purchased, the date such goods or services were shipped or provided, 
and the amount paid by the customer for the goods or services; \1\
---------------------------------------------------------------------------

    \1\ For offers of consumer credit products subject to the Truth 
in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR pt. 
226, compliance with the recordkeeping requirements under the Truth 
in Lending Act, and Regulation Z, will constitute compliance with 
Sec.  310.5(a)(4) of this part.
---------------------------------------------------------------------------

    (5) For each person with whom a seller intends to assert it has an 
established business relationship under Sec.  310.2(q)(2), a record of 
the name and last known telephone number of that person, the date that 
person submitted an inquiry or application regarding the seller's goods 
or services, and the goods or services inquired about;
    (6) For each person that a telemarketer intends to assert is a 
previous donor to a particular charitable organization under Sec.  
310.2(aa), a record of the name and last known telephone number of that 
person, and the last date that person donated to that particular 
charitable organization;
    (7) For each current or former employee directly involved in 
telephone sales or solicitations, a record of the name, any fictitious 
name used, the last known home address and telephone number, and the 
job title(s) of that employee; provided, however, that if the seller or 
telemarketer permits fictitious names to be used by employees, each 
fictitious name must be traceable to only one specific employee;
    (8) All verifiable authorizations or records of express informed 
consent or express agreement (collectively, ``Consent'') required to be 
provided or received under this part. A complete record of Consent 
includes the following:
    (i) The name and telephone number of the person providing Consent;
    (ii) A copy of the request for Consent in the same manner and 
format in which it was presented to the person providing Consent;
    (iii) The purpose for which Consent is requested and given;
    (iv) A copy of the Consent provided;
    (v) The date Consent was given; and
    (vi) For the copy of Consent provided under Sec. Sec.  310.3(a)(3), 
310.4(a)(7), 310.4(b)(1)(iii)(B)(1), or 310.4(b)(1)(v)(A), a complete 
record must also include all information specified in those respective 
sections of this part;
    (9) A record of each service provider a telemarketer used to 
deliver an outbound telephone call to a person on behalf of a seller 
for each good or service the seller offers for sale through 
telemarketing. For each such service provider, a complete record 
includes the contract for the service provided, the date the contract 
was signed, and the time period the contract is in effect. Such 
contracts must be kept for 5 years from the date the contract expires;
    (10) A record of each person who has stated she does not wish to 
receive any outbound telephone calls made on behalf of a seller or 
charitable organization pursuant to Sec.  310.4(b)(1)(iii)(A) 
including: the name of the person, the telephone number(s) associated 
with the request, the seller or charitable organization from which the 
person does not wish to receive calls, the telemarketer that called the 
person, the date the person requested that she cease receiving such 
calls, and the goods or services the seller was offering for sale or 
the charitable purpose for which a charitable contribution was being 
solicited; and
    (11) A record of which version of the Commission's ``do-not-call'' 
registry was used to ensure compliance with Sec.  310.4(b)(1)(iii)(B). 
Such record must include:
    (i) The name of the entity which accessed the registry;

[[Page 26785]]

    (ii) The date the ``do-not-call'' registry was accessed;
    (iii) The subscription account number that was used to access the 
registry; and
    (iv) The telemarketing campaign for which it was accessed.
    (b) A seller or telemarketer may keep the records required by 
paragraph (a) of this section in the same manner, format, or place as 
they keep such records in the ordinary course of business. The format 
for records required by paragraph (a)(2)(vii) of this section, and any 
other records that include a time or telephone number, must also comply 
with the following:
    (1) The format for domestic telephone numbers must comport with the 
North American Numbering plan;
    (2) The format for international telephone numbers must comport 
with the standard established in the International Telecommunications 
Union's Recommendation ITU-T E.164: Series E: Overall Network 
Operation, Telephone Service, Service Operation and Human Factors, 
published 11/2010 (incorporated by reference, see paragraph (g)(1) of 
this section);
    (3) The time and duration of a call must be kept to the closest 
second; and
    (4) Time must be recorded in Coordinated Universal Time (UTC).
    (c) Failure to keep each record required by paragraph (a) of this 
section in a complete and accurate manner, and in compliance with 
paragraph (b) of this section, as applicable, is a violation of this 
part.
    (d) For records kept pursuant to paragraph (a)(2) of this section, 
the seller or telemarketer will not be liable for failure to keep 
complete and accurate records pursuant to this part if it can 
demonstrate, with documentation, that as part of its routine business 
practice:
    (1) It has established and implemented procedures to ensure 
completeness and accuracy of its records;
    (2) It has trained its personnel, and any entity assisting it in 
its compliance, in such procedures;
    (3) It monitors compliance with and enforces such procedures, and 
maintains records documenting such monitoring and enforcement; and
    (4) Any failure to keep complete and accurate records was 
temporary, due to inadvertent error, and corrected within 30 days of 
discovery.
    (e) The seller and the telemarketer calling on behalf of the seller 
may, by written agreement, allocate responsibility between themselves 
for the recordkeeping required by this section. When a seller and 
telemarketer have entered into such an agreement, the terms of that 
agreement will govern, and the seller or telemarketer, as the case may 
be, need not keep records that duplicate those of the other. If by 
written agreement the telemarketer bears the responsibility for the 
recordkeeping requirements of this section, the seller must establish 
and implement practices and procedures to ensure the telemarketer is 
complying with the requirements of this section. These practices and 
procedures include retaining access to any record the telemarketer 
creates under this section on the seller's behalf. If the agreement is 
unclear as to who must maintain any required record(s), or if no such 
agreement exists, both the telemarketer and the seller are responsible 
for complying with this section.
    (f) In the event of any dissolution or termination of the seller's 
or telemarketer's business, the principal of that seller or 
telemarketer must maintain all records required under this section. In 
the event of any sale, assignment, or other change in ownership of the 
seller's or telemarketer's business, the successor business must 
maintain all records required under this section.
    (g) The material required in this section is incorporated by 
reference into this section with the approval of the Director of the 
Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. All approved 
material is available for inspection at the Federal Trade Commission 
(FTC) and at the National Archives and Records Administration (NARA). 
Contact FTC at: FTC Library, (202) 326-2395, Federal Trade Commission, 
Room H-630, 600 Pennsylvania Avenue NW, Washington, DC 20580, or by 
email at [email protected]. For information on the availability of this 
material at NARA, email [email protected] or go to 
www.archives.gov/federal-register/cfr/ibr-locations.html. It is 
available from: The International Telecommunications Union, 
Telecommunications Standardization Bureau, Place des Nations, CH-1211 
Geneva 20; (+41 22 730 5852); https://www.itu.int/en/pages/default.aspx.
    (1) Recommendation ITU-T E.164: Series E: Overall Network 
Operation, Telephone Service, Service Operation and Human Factors, 
published 11/2010.
    (2) [Reserved]

0
6. Amend Sec.  310.6 as follows:
0
a. In paragraphs (b)(1), (b)(2), and (b)(3), remove the words 
``Sec. Sec.  310.4(a)(1), (a)(7), (b), and (c)'' and add, in their 
place, the words ``Sec.  310.4(a)(1), (a)(8), (b), and (c)''; and
0
b. Revise paragraph (b)(7) to read as follows:


Sec.  310.6   Exemptions.

* * * * *
    (b) * * *
    (7) Telephone calls between a telemarketer and any business to 
induce the purchase of goods or services or a charitable contribution 
by the business, provided, however that this exemption does not apply 
to:
    (i) The requirements of Sec.  310.3(a)(2) and(4); or
    (ii) Calls to induce the retail sale of nondurable office or 
cleaning supplies; provided, however, that Sec. Sec.  
310.4(b)(1)(iii)(B) and 310.5 shall not apply to sellers or 
telemarketers of nondurable office or cleaning supplies.

0
7. Amend Sec.  310.7 by revising paragraph (a) to read as follows:


Sec.  310.7   Actions by states and private persons.

    (a) Any attorney general or other officer of a State authorized by 
the State to bring an action under the Telemarketing and Consumer Fraud 
and Abuse Prevention Act, and any private person who brings an action 
under that Act, must serve written notice of its action on the 
Commission, if feasible, prior to its initiating an action under this 
part. The notice must be sent to the Office of the Director, Bureau of 
Consumer Protection, Federal Trade Commission, Washington, DC 20580, at 
[email protected] and must include a copy of the State's or private 
person's complaint and any other pleadings to be filed with the court. 
If prior notice is not feasible, the State or private person must serve 
the Commission with the required notice immediately upon instituting 
its action.
* * * * *


Sec. Sec.  310.3, 310.4, 310.6, 310.8, 310.9   [Amended]

0
8. In addition to the amendments set forth above, in 16 CFR part 310, 
remove the words ``this Rule'' and add, in their place, the words 
``this part'' in the following places:
0
a. Section 310.3(a) introductory text, (b), (c) introductory text, (d) 
introductory text, and newly redesignated footnotes 2 and 5.
0
b. Section 310.4(a) introductory text, (a)(2)(ii), (b)(1) introductory 
text, (b)(2), (c), (d) introductory text, (e) introductory text, and 
newly redesignated footnotes 1 and 2;
0
c. Section 310.6(a) and (b) introductory text;
0
d. Section 310.8(a), (b), and (e); and
0
e. Section 310.9.


[[Page 26786]]


    By direction of the Commission.
Joel Christie,
Acting Secretary.
[FR Doc. 2024-07180 Filed 4-15-24; 8:45 am]
BILLING CODE 6750-01-P

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