[August 10, 2010] Telemarketing Sales Rule Tweet Aug 10, 2010 (Federal Trade Commission Documents and Publications/ContentWorks via COMTEX) -- SUMMARY: In this document, the Commission adopts amendments to the Telemarketing Sales Rule ("TSR" or "Rule") that address the telemarketing of debt relief services. These amendments define debt relief services, prohibit debt relief providers from collecting fees until after services have been provided, require specific disclosures of material information about offered debt relief services, prohibit specific misrepresentations about material aspects of debt relief services, and extend the TSR's coverage to include inbound calls made to debt relief companies in response to general media advertisements. The amendments are necessary to protect consumers from deceptive or abusive practices in the telemarketing of debt relief services. DATES: These final amendments are effective on September 27, 2010, except for SEC 310.4(a)(5), which is effective on October 27, 2010. ADDRESSES: Requests for copies of these amendments to the TSR and this Statement of Basis and Purpose ("SBP") should be sent to: Public Reference Branch, Federal Trade Commission, 600 Pennsylvania Avenue NW, Room 130, Washington, D.C. 20580. The complete record of this proceeding is also available at that address. Relevant portions of the proceeding, including the final amendments to the TSR and SBP, are available at (http://www.ftc.gov). FOR FURTHER INFORMATION CONTACT: Alice Hrdy, Allison Brown, Evan Zullow, or Stephanie Rosenthal, Attorneys, Division of Financial Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Room NJ-3158, Washington, D.C. 20580, (202) 326-3224. SUPPLEMENTARY INFORMATION: I. Overview and Background A. Overview 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 on August 19, 2009. /1/ After careful review and consideration of the entire record on the issues presented in this rulemaking proceeding, including public comments submitted by 321 interested parties, /2/ the Commission has decided to adopt, with several modifications, the proposed amendments to the TSR intended to curb deceptive and abusive practices in the telemarketing of debt relief services. The Rule provisions will: (1) prohibit debt relief service providers /3/ from collecting a fee for services until a debt has been settled, altered, or reduced; (2) require certain disclosures in calls marketing debt relief services; (3) prohibit specific misrepresentations about material aspects of the services; and (4) extend the TSR's coverage to include inbound calls made to debt relief companies in response to general media advertisements. FOOTNOTE 1 TSR Proposed Rule, 74 FR 41988 (Aug. 19, 2009). The TSR is set forth at 16 CFR 310. END FOOTNOTE FOOTNOTE 2 The comments and other material placed on the rulemaking record are available at (http://www.ftc.gov/os/comments/tsrdebtrelief/index.shtm). In addition, a list of commenters cited in this SBP, along with their short citation names or acronyms used throughout the SBP, follows Section V of this SBP. When a commenter submitted more than one comment, the comment is also identified by date. END FOOTNOTE FOOTNOTE 3 Throughout the SBP, the Commission uses the term "providers" to refer to "sellers and telemarketers" as defined in the TSR. "Seller" is defined as "any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration." 16 CFR 310.2(aa). "Telemarketer" is defined as "any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor." 16 CFR 310.2(cc). END FOOTNOTE Beginning on September 27, 2010, sellers and telemarketers of debt relief services will be required to comply with the amended TSR requirements, except for SEC 310.4(a)(5), the advance fee ban provision, which will be effective on October 27, 2010. B. The Commission's Authority Under the TSR Enacted in 1994, the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act" or "Act") targets deceptive and abusive telemarketing practices, and directed the Commission to adopt a rule with anti-fraud and privacy protections for consumers receiving telephone solicitations to purchase goods or services. /4/ Specifically, the Act directed the Commission to issue a rule defining and prohibiting deceptive and abusive telemarketing acts or practices. /5/ In addition, the Act mandated that the FTC promulgate regulations addressing some specific practices, which the Act designated as "abusive." /6/ The Act also authorized state attorneys general or other appropriate state officials, as well as private persons who meet stringent jurisdictional requirements, to bring civil actions in federal district court. /7/ FOOTNOTE 4 15 U.S.C. 6101-6108. Subsequently, the USA PATRIOT Act, Pub. L. No. 107-56, 115 Stat. 272 (Oct. 26, 2001), expanded the Telemarketing Act's definition of "telemarketing" to encompass calls soliciting charitable contributions, donations, or gifts of money or any other thing of value. END FOOTNOTE FOOTNOTE 5 15 U.S.C. 6102(a). END FOOTNOTE FOOTNOTE 6 15 U.S.C. 6102(a)(3). END FOOTNOTE FOOTNOTE 7 15 U.S.C. 6103, 6104. END FOOTNOTE Pursuant to the Act's directive, the Commission promulgated the original TSR in 1995 and subsequently amended it in 2003 and again in 2008 to add, among other things, provisions establishing the National Do Not Call Registry and addressing the use of pre-recorded messages. /8/ The TSR applies to virtually all "telemarketing," defined 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." /9/ The Telemarketing Act, however, explicitly states that the jurisdiction of the Commission in enforcing the Rule is coextensive with its jurisdiction under Section 5 of the Federal Trade Commission Act ("FTC Act"). /10/ As a result, some entities and products fall outside the scope of the TSR. /11/ FOOTNOTE 8 TSR and Statement of Basis and Purpose and Final Rule ("TSR Final Rule"), 60 FR 43842 (Aug. 23, 1995); Amended TSR and Statement of Basis and Purpose ("TSR Amended Rule"), 68 FR 4580 (Jan. 29, 2003); Amended TSR and Statement of Basis and Purpose ("TSR Amended Rule 2008"), 73 FR 51164 (Aug. 29, 2008). END FOOTNOTE FOOTNOTE 9 16 CFR 310.2(cc) (using the same definition as the Telemarketing Act, 15 U.S.C. 6106(4)). The TSR excludes from the definition of telemarketing: the solicitation of sales through the mailing of a catalog which: contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. Id. END FOOTNOTE FOOTNOTE 10 15 U.S.C. 6105(b). END FOOTNOTE FOOTNOTE 11 See 15 U.S.C. 44, 45(a)(2), which exclude or limit from the Commission's jurisdiction several types of entities, including bona fide nonprofits, bank entities (including, among others, banks, thrifts, and federally chartered credit unions), and common carriers, as well as the business of insurance. END FOOTNOTE In addition, the Rule wholly or partially exempts several types of calls from its coverage. For example, the Rule generally exempts inbound calls placed by consumers in response to direct mail or general media advertising. /12/ However, there are certain "carve-outs" from some of the TSR's exemptions that limit their reach, such as the carve-out for calls initiated by a customer in response to a general advertisement relating to investment opportunities. /13/ FOOTNOTE 12 16 CFR 310.6(b)(5)-(6). Moreover, the Rule exempts from the National Do Not Call Registry provisions calls placed by for-profit telemarketers to solicit charitable contributions; such calls are not exempt, however, from the "entity-specific" do not call provisions or the TSR's other requirements. 16 CFR 310.6(a). END FOOTNOTE FOOTNOTE 13 See, e.g., 16 CFR 310.6(b)(5)-(6) (provisions related to general advertisements and direct mail solicitations). END FOOTNOTE --This is a summary of a Federal Register article originally published on the page number listed below-- Final rule amendments. CFR Part: "16 CFR Part 310" Citation: "75 FR 48458" Federal Register Page Number: "48458" "Rules and Regulations" [ Back To TMCnet.com's Homepage ]