TSR Changes: What You Need To Know - Klein Moynihan Turco LLP

TSR Changes: What You Need to Know

 On April 28, 2022, the Federal Trade Commission (“FTC”) unanimously approved a Notice of Proposed Rulemaking (“NPRM”) and an Advanced Notice of Proposed Rulemaking (“ANPRM”) that would amend the Telemarketing Sales Rule (“TSR”). The FTC believes these changes are necessary to protect consumers from deceptive and abusive telemarketing practices. Please note that any business that violates the TSR may be required to compensate injured consumers, is subject to a nationwide injunction, and faces civil penalties of up to $43,792 for each violation. In addition, violations of the TSR typically coincide with Telephone Consumer Protection Act (“TCPA”) violations, which carry their own penalties. To avoid such an eventuality, businesses need to be aware of and prepare to comply with the TSR changes should they go into effect.

TSR and the FTC

The TSR provides the FTC and state attorneys general with tools to fight telemarketing fraud/abuse. The TSR also provides consumers with information, privacy protections, and defenses that they can use to prevent the receipt of unwanted telemarketing calls. Among other things, the TSR requires telemarketers to disclose material terms during their calls, follow time-of-day restrictions, and comply with consumer do-not-call requests. 

In light of the TSR’s increasingly discernable weaknesses, the FTC has proposed the following changes to enhance protections offered to consumers, including small businesses. The changes would also support the FTC’s TSR enforcement mandate.

TSR Changes Contemplated by the NPRM 

The TSR amendments contained in the NPRM contain some key provisions, including: 1) recordkeeping requirements, 2) limiting the Business-to-Business (“B2B”) exemption, and 3) clarification of the “previous donor” definition. 

The TSR changes would require telemarketers and sellers to maintain certain records of their telemarketing activities. Specifically, the proposed amendments require the retention of the following records: 

  1. a copy of each unique prerecorded message;
  2. call detail records of all telemarketing campaigns;
  3. records sufficient to show that a seller has an established business relationship with a consumer; 
  4. records sufficient to show that a consumer is a previous donor to a particular charitable organization; 
  5. the service providers that a telemarketer uses to deliver outbound calls; 
  6. a seller or charitable organization’s entity-specific do-not-call registry; and 
  7. the Federal Do-Not-Call Registry used to ensure compliance with the requirements of the TSR.

The proposed TSR changes would also limit the B2B exemption, and prohibit material misrepresentations and false or misleading statements in all B2B telemarketing calls. In addition, the “previous donor” definition would be revised as follows: “any person who has made a charitable contribution to a particular charitable organization within the two-year period immediately preceding the date of the telemarketing call soliciting on behalf of that charitable organization.” 

To learn more about the ANPRM changes, which would remove the B2B exemption in its entirety, read our blog: FTC Begins TSR Rulemaking Process, Targets Repeal of B2B Exception.

Please note that the FTC is accepting comments on the NPRM for 60 days following publication in the Federal Register. Should these significant changes be written into law, the telemarketing landscape would shift yet again.

As always, given the significant risks, it is best to obtain guidance from experienced marketing attorneys before launching any telemarketing campaign. If you are interested in learning more about this topic or need to review your telemarketing practices and procedures, please email us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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