Telemarketing Sales Rule Amendment Sparks Debate Between FTC Republicans Ahead of Administration Transition

Just before Thanksgiving, the Federal Trade Commission (FTC) announced a Final Rule significantly expanding the coverage of the Telemarketing Sales Rule (TSR). The amendment extends the TSR’s prohibition against deceptive practices to cover inbound telemarketing calls for technical support services.

Under the amendment, technical support services are defined as “any plan, program, software, or service that is marketed to repair, maintain, or improve the performance or security of any device on which code can be downloaded, installed, run, or otherwise used, such as a computer, smartphone, tablet, or smart home product, including any software or application run on such device.”

Consumers calling a marketer of such services in response to any advertisement for such services are protected by the TSR’s provisions. Exempted from the TSR is any “plan, program, software, or service in which the person providing the repair, maintenance, or improvement obtains physical possession of the device being repaired.”

Commissioner Andrew Ferguson dissented, writing that while he did not believe the Final Rule constituted bad policy, in the wake of the recent presidential election, the agency should focus on routine enforcement and provide an orderly transition to the next administration. Ferguson, who President-elect Donald Trump said Tuesday he will elevate to FTC chair, argued that the election reflects the public’s rejection of the current administration’s regulatory approach and support for Trump’s “pro-innovation, pro-competition, pro-worker, and pro-consumer vision.”

Ferguson said he will vote against all new rules not required by statute and any “unprecedented” enforcement actions until the administration transition is complete. On Tuesday, Trump also said he would nominate Republican lawyer Mark Meador as a commissioner.

Commissioner Melissa Holyoak concurred with the FTC’s rulemaking, disagreeing with Ferguson’s position that the Final Rule went beyond the agency’s role. Holyoak emphasized that Congress, not current Chair Lina Khan, tasked the FTC with promulgating and enforcing amendments to protect vulnerable Americans.

Holyoak also wrote that the Final Rule is consistent with Trump’s “past aggressive anti-fraud policies [and] his relentless commitment to keep America’s seniors safe.” Holyoak said she has not hesitated to dissent against the majority and noted that she has, at times, done so “alone”—a reference to her solo dissent to the FTC’s Negative Option Rule.

The FTC has repeatedly extended the scope of the TSR to cover industries or practices it dislikes, such as debt collection, debt settlement, and others.  

What else comes down from the FTC between now and Inauguration Day, and how the Republican commissioners react to same, will be interesting.

The authors thank law clerk Eden Caliendo for her assistance in writing this post.

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