Telemarketing Sales Rule (TSR): Requirements and Compliance
The Telemarketing Sales Rule establishes the federal framework governing outbound and inbound telemarketing calls in the United States, setting mandatory disclosure requirements, prohibited conduct standards, and recordkeeping obligations on sellers and telemarketers. Administered by the Federal Trade Commission under authority granted by the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, the TSR applies to a broad range of commercial telephone solicitation activity. Violations carry civil penalties that can reach $51,744 per violation (FTC Civil Penalty Adjustments, 16 C.F.R. § 1.98), making compliance a material business risk for any organization engaged in telephone-based sales.
Definition and Scope
The TSR, codified at 16 C.F.R. Part 310, defines "telemarketing" as a plan, program, or campaign conducted to induce the purchase of goods or services through the use of one or more telephones, involving more than one interstate telephone call. The rule covers both outbound calls initiated by sellers or telemarketers and inbound calls responding to general media advertisements or direct mail solicitations.
The TSR's scope is intentionally broad. It reaches:
- Sellers who provide or arrange for goods or services in exchange for consideration
- Telemarketers who initiate or receive telephone calls on behalf of sellers
- Attorneys who use telemarketing for client acquisition in covered contexts
- Charitable solicitation calls, which carry a specific subset of requirements
Exemptions exist for calls to businesses (business-to-business calls), calls that are entirely intrastate, and calls in response to catalogs that contain at least 24 pages and 250 separate items. Banking institutions and federal credit unions are regulated by separate federal agencies rather than the FTC for TSR purposes. The FTC's full resource on the rule's scope details which entity types fall under specific provisions.
How It Works
The TSR imposes requirements across four operational categories: mandatory disclosures, prohibited deceptive or abusive practices, payment restrictions, and recordkeeping.
Mandatory Disclosures
Telemarketers must promptly disclose, before any sales pitch:
- The identity of the seller
- That the call is a sales call
- The nature of the goods or services being offered
- The total costs and material restrictions of any offer
For prize promotions, the odds of winning, that no purchase is necessary, and any conditions to receive the prize must all be stated before requesting payment.
Prohibited Conduct
The rule prohibits a defined list of deceptive and abusive acts, including making false or misleading statements, calling outside the permitted window of 8:00 a.m. to 9:00 p.m. local time at the called party's location, failing to transmit accurate caller ID information, and threatening or intimidating consumers.
Payment Restrictions
Certain payment methods are outright prohibited. Telemarketers may not accept payment via remotely created checks, cash-to-cash money transfers (such as Western Union), or cash reload mechanisms (such as MoneyPak or Reloadit) in most circumstances. These restrictions were strengthened in 2015 amendments to the rule (FTC Final Rule, 80 Fed. Reg. 77520) specifically to close payment channels favored in fraud schemes.
Do Not Call Compliance
Sellers and telemarketers must honor the National Do Not Call Registry, scrub their call lists against the registry every 31 days, and maintain company-specific do-not-call lists for consumers who request them during a call.
Recordkeeping
Covered entities must retain advertising and promotional materials, sales records, and employee training records for 24 months (16 C.F.R. § 310.5).
Common Scenarios
Upsells During Inbound Calls
When a consumer calls in to order a product and the telemarketer introduces a new offer, that upsell becomes subject to TSR disclosure requirements. Internal transfers from a customer service line to a sales line are covered if the transferred call involves a separate solicitation.
Prerecorded Message Calls (Robocalls)
Outbound calls delivering a prerecorded sales message require the consumer's express written agreement before the call is placed. This is a higher consent standard than prior oral agreement, and it applies even where the seller has an existing business relationship with the consumer. The prerecorded message itself must include a mechanism allowing consumers to opt out immediately during the call.
Free Trial Offers with Continuity Plans
Offers structured as free trials that automatically convert to paid subscriptions must disclose all material terms — including cancellation procedures and billing amounts — before obtaining payment information. This scenario intersects with the FTC Negative Option Rule, which applies overlapping requirements.
Third-Party Lead Generation
When a seller purchases call lists from a lead generator and calls those consumers, the seller bears TSR liability for the calls even though it did not generate the lead. Liability travels with the calling activity, not the originating data source.
Decision Boundaries
The TSR's coverage turns on several threshold determinations that require specific analysis.
Outbound vs. Inbound Calls
Outbound calls are presumptively covered. Inbound calls triggered by direct mail or general media advertising are covered. Inbound calls triggered by a catalog (meeting the size thresholds noted above) or by a prior telemarketing-initiated contact within the past 18 months fall under modified rules.
Interstate vs. Intrastate
A call must cross state lines, or be part of a campaign that crosses state lines, to trigger FTC jurisdiction under the TSR. Pure intrastate calling campaigns may fall under state telemarketing law rather than the federal rule, though many states have adopted substantially parallel statutes.
B2B vs. B2C
Business-to-business calls are excluded from most TSR requirements, including do-not-call provisions. However, if the goods or services are primarily for personal, family, or household use — even when sold to a business — the call may remain covered. The nature of the end use, not merely the identity of the purchaser, determines applicability.
Charitable vs. Commercial Solicitations
Charitable solicitation calls are covered by a subset of TSR provisions, including prohibitions on deceptive representations and certain abusive practices. The disclosure requirements differ: a charity-side telemarketer must disclose the name of the charitable organization on whose behalf the call is made.
The FTC's broader consumer protection enforcement framework contextualizes the TSR within a set of overlapping rules — including the FTC CAN-SPAM Act enforcement framework and Section 5 unfair or deceptive acts standards — that collectively address deceptive and abusive commercial outreach across communication channels.