Federal Trade Commission (FTC) Expands Telemarketing Rules Impacting Business-to-Business (B2B) Sales and Compliance

The Federal Trade Commission (FTC) expands telemarketing rules by announcing substantial amendments to the Telemarketing Sales Rule (TSR) on March 7, 2024, with effective dates pending publication in the Federal Register. According to an article by law firm Hudson Cook, these revisions stem from a Notice of Proposed Rulemaking issued in June 2022 and were shaped by public feedback. One notable change extends certain TSR provisions to all business-to-business (B2B) telemarketing for the first time, while another broadens the recordkeeping requirement, excluding B2B sales calls.

Since its inception in 1995, the TSR has largely exempted B2B telemarketing, focusing on sales of office and cleaning supplies due to past fraud incidents. Although the FTC has periodically reviewed this exemption, no formal changes have been made until now. In the recent amendments, the FTC decided to apply only the prohibition on misrepresentations to B2B telemarketing, rather than subjecting it to the entire TSR.

Once the new B2B provision becomes effective, all telemarketing calls aiming to induce business purchases must adhere to the TSR’s regulations against misrepresentations. These rules cover various aspects such as costs, quantities, performance claims, and refund policies. Violations can result in civil money penalties, with potentially significant fines, following a unanimous 2021 U.S. Supreme Court decision granting the FTC authority to seek monetary relief in TSR enforcement actions.

According to the article, businesses engaged in telemarketing, including B2B entities, are advised to review the amendments closely and make necessary adjustments for compliance. Despite the FTC’s portrayal of these changes as standard procedure for compliant companies, the risk of penalties underscores the importance of thorough adherence to the updated regulations.