FTC Amends Telemarketing Sales Rule to Combat Deceptive Practices

The Federal Trade Commission (FTC) has amended its Telemarketing Sales Rule to prevent deceptive practices, with changes taking effect on May 16, 2024. A 180-day grace period for expanded recordkeeping requirements will expire on October 15, 2024.

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Nitish Verma
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FTC Amends Telemarketing Sales Rule to Combat Deceptive Practices

FTC Amends Telemarketing Sales Rule to Combat Deceptive Practices

The Federal Trade Commission (FTC) has amended its Telemarketing Sales Rule, with the changes set to take effect on May 16, 2024. The amendments aim to prevent deceptive and unfair business practices in telemarketing, particularly with regards to non, profits charitable fundraising. A 180-day grace period has been granted for expanded requirements recordkeeping, which will expire on October 15, 2024.

The FTC's move comes in response to a history of deceptive telemarketing operations. In a recent case, 46 agencies from 38 states and the District of Columbia stopped a massive telefunding operation that made 1.3 billion deceptive charitable fundraising calls. The defendants in this operation, Associated Community Services (ACS) and its related defendants, collected more than $110 million using their deceptive solicitations.

Why this matters: The amended Telemarketing Sales Rule is a vital step in protecting consumers from fraudulent activities, which can have severe financial and emotional consequences. By strengthening regulations and enforcement, the FTC can help prevent the exploitation of vulnerable individuals and maintain trust in the marketplace. By strengthening regulations and enforcement, the FTC can help prevent the exploitation of vulnerable individuals and maintain trust in the marketplace.

The FTC has also obtained court orders and settlements against various companies and individuals involved in telemarketing scams, resulting in significant financial judgments and refunds to affected consumers. In August 2019, the FTC sent refund checks totaling more than $11.6 million to small businesses and other organizations following a court order against a Maryland-based office supply news operation.

The amended Telemarketing Sales Rule is expected to provide the FTC with additional tools to combat deceptive telemarketing practices. The expanded recordkeeping requirements will likely enable the agency to better investigate and prosecute offenders. However, the specific details of the amendments have not been released, and their effectiveness will soon become apparent.

The telemarketing industry has faced increased scrutiny in recent years as a result of the proliferation of robocalls and scams targeting consumers. The FTC's efforts to update its regulations and enforce them aggressively are a response to this growing problem. The agency has also worked closely with state attorneys general and other federal agencies, including the Department of Justice, to coordinate commission, actions enforcement actions and share resources.

Next year, the amended Telemarketing Sales Rule takes effect, and businesses engaged in telemarketing will need to review their practices and ensure compliance with the new requirements. The 180-day grace period for expanded recordkeeping should provide sufficient time for companies to adapt their systems and processes. Failure to comply with the updated regulations could result in significant penalties and legal action by the FTC.

Consumer advocates have welcomed the FTC's move to strengthen telemarketing regulations, viewing it as a necessary step to protect the public from fraud and abuse. However, some industry groups have expressed concerns about the potential burden of increased recordkeeping and the need for clarity on the specific requirements.

The FTC's amendments to the Telemarketing Sales Rule are set to take effect on May 16, 2024, with a 180-day grace period for expanded recordkeeping requirements expiring on October 15, 2024. With the effective date approaching, the FTC is expected to provide further guidance and resources to help businesses understand and comply with the new requirements. The agency will also likely continue its enforcement efforts against deceptive telemarketing practices, working with state and federal partners to protect consumers and maintain the integrity of the marketplace.

Key Takeaways

  • FTC amends Telemarketing Sales Rule to prevent deceptive practices, effective May 16, 2024.
  • 180-day grace period for expanded recordkeeping requirements ends October 15, 2024.
  • New rule aims to protect consumers from fraudulent telemarketing, especially non-profit scams.
  • FTC has obtained significant judgments and refunds for affected consumers in recent cases.
  • Businesses must review and adapt practices to comply with new requirements to avoid penalties.