DEEPLY CONCERNING: The FTC’S New TSR Guidance is a Little Off the Rails and Suggests It May Be Lights Out for an Entire Industry

So someone told me the other day I missed a real opportunity with this whole “Czar of the TCPA” thing. If I had accepted the alternate spelling “Tsar” I could have gone with “TSR Tsar” and it would have been really catchy.

TSR Tsar.

Man… that is pretty good.

Anyway, I am the Czar and I will just have to live with it.

So a few people have pointed out a recent clarification on the FTC’s TSR website effective “May, 2023”: https://www.ftc.gov/business-guidance/resources/complying-telemarketing-sales-rule

And, yes, I agree it is too coincidental that the new provisions went up right in the midst of the FCC’s NPRM on similar subject matter. And yes… I do hate it.

But let’s cover it.

There are two major items of concern.

First:

Does a consumer’s written agreement to receive prerecorded message calls from a seller permit others, such as the seller’s affiliates or marketing partners, to place such calls? No. The TSR requires that the written agreement identify the single “specific seller” authorized to deliver prerecorded messages. The authorization does not extend to other sellers, such as affiliates, marketing partners, or others.

Hmmm.

Well what the TSR actually says is that “the seller” must have “obtained” a “writing” reflecting “the willingness of the recipient of the call to receive calls that deliver prerecorded messages by or on behalf of a specific seller.” 16 C.F.R. 310.4(b)(1)(v)(A).

So the “by or on behalf of” language pretty clearly nukes the FTC’s new question and answer position. The rule simply does not state that “others” are not permitted to call. Indeed, the rule states the opposite– “others” are allowed to call, so long as it is “on behalf of” the seller.

Now this is different, of course, than a single seller obtaining consent and then passing it on to other sellers or marketers who sell different products or make calls on behalf of other sellers. But the FTC’s guidance here should not be overread.

Second:

May a seller obtain a consumer’s written permission to receive prerecorded messages from a third-party, such as a lead generator? No.  The TSR requires the seller to obtain permission directly from the recipient of the call.  The seller cannot rely on third-parties to obtain permission.

Hmmm….

Again looking at 16 C.F.R. 310.4(b)(1)(v)(A) the provision provides:

In any such call to induce the purchase of any good or service, the seller has obtained from the recipient of the call an express agreement, in writing, that:

(i) The seller obtained only after a clear and conspicuous disclosure that the purpose of the agreement is to authorize the seller to place prerecorded calls to such person;

(ii) The seller obtained without requiring, directly or indirectly, that the agreement be executed as a condition of purchasing any good or service;

(iii) Evidences the willingness of the recipient of the call to receive calls that deliver prerecorded messages by or on behalf of a specific seller;

Now this is interesting. On the one hand the provision does suggest that “the seller” has “obtained the consent.” But it also provides that the consent has provide consent of a specific seller, not the specific seller.

If the provision were to be read as the FTC’s guidance suggests then the requirement of “a specific seller” would be redundant and the use of the non-specific “a” as opposed to “the” would be illogical.

The only way to read this provision–consistent with basic cannons of construction–is that a seller may “obtain” the consent directly or indirectly (importantly the word “obtain” simply means “get, acquire, or secure” but does not imply that anything was done directly) but that the consent must specifically name the seller who has “obtained” the consent.

This is roughly consistent with current industry practice– consumers provide their consent, at times, to lead aggregators who provide consent forms that specifically identify sellers. The consent form is then sold to–i.e. obtained by–a certain number of those sellers, who now have an otherwise binding agreement with the consumer (provided the remaining required language is presence.)

The FTC’s new guidance suggests that widespread industry practice is actually illegal. But that can’t be right. Its not what the rule says, or what any court has held. Still, we see a damaging and perplexing suggestion by the FTC that consent cannot be transferred and that’s a real overreach.

I see this as a plain (albeit unfortunate and baseless) effort by agents at the FTC to align with the NCLC and PK’s disastrous position in their comments to the NPRM with the FCC. This is legitimately frightening and another wake up call for anybody who still doesn’t understand the significance of the NPRM proceeding.

The good news, however, is that these provisions apply only to the use of prerecorded calls–which you shouldn’t be relying on anyway these days.

If you have concerns–and you probably should–let’s chat it through.