What the telemarketing sales rule is designed to do (and what it costs to ignore it)

Last updated 2026-07-09

What is the Telemarketing Sales Rule?

The Telemarketing Sales Rule (TSR) is a federal regulation the Federal Trade Commission issued under the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 6101-6108 ^[1]. It took effect in 1995. Congress and the FTC have reworked it several times since: a 2003 amendment added the National Do Not Call Registry, a 2010 amendment banned certain payment methods, and a 2015 amendment tightened rules around debt relief services.

The rule reaches any person or entity engaged in telemarketing, which the FTC defines as a plan, program, or campaign to sell goods or services by telephone. That definition is broader than most people expect. It covers outbound cold calls, inbound calls that come from an advertisement, and upsells during an existing customer call, with a few narrow exceptions.

B2B calls get partial exemptions. But the FTC has been clear that many of the TSR's core prohibitions still apply when you're calling another business. The exemptions are narrower than most sales teams assume. Banks, common carriers, and nonprofits soliciting charitable donations have specific carve-outs, and a for-profit company calling on behalf of a nonprofit is not automatically covered by that exemption ^[2].

Building an outbound program and wondering whether the TSR touches you? The answer is almost certainly yes, unless you sell exclusively face to face with no phone component at all.

What is the telemarketing sales rule designed to protect consumers from?

The TSR is designed to stop deceptive and abusive telemarketing. The enabling statute states the reasoning plainly: Congress found that "deceptive telemarketing acts or practices and other abusive telemarketing acts or practices" cause substantial harm to consumers ^[1]. The rule turns that finding into enforceable requirements across four categories of harm.

First, deceptive practices. Telemarketers cannot misrepresent the total cost of goods, material restrictions on an offer, the seller's refund policy, prize winnings, or the nature of a business relationship. The FTC's TSR compliance guide states a telemarketer must clearly and truthfully disclose the total cost before a consumer pays ^[2]. The disclosures are not optional even when the consumer sounds ready to buy.

Second, abusive practices. The TSR bans calling before 8 a.m. or after 9 p.m. local time at the consumer's location, threatening or intimidating callers, and causing a phone to ring repeatedly to annoy someone. Abandoned calls, where a live agent isn't ready when a consumer answers, are regulated separately. A safe harbor caps abandoned calls at 3% of answered calls in any 30-day campaign and requires that an automated message play within 2 seconds of the consumer's greeting ^[3].

Third, payment method restrictions. The 2010 amendments banned remotely created payment orders and remotely created checks for most telemarketing transactions because fraud operations leaned on them. Cash-to-cash wire transfers as payment for telemarketed goods are also off the table in most contexts.

Fourth, the Do Not Call Registry. The TSR created the National DNC Registry and requires telemarketers to scrub call lists against it every 31 days ^[4]. Calling a registered number without a specific exemption (established business relationship, prior written consent, or an exempt category) is a standalone violation, no matter how clean the rest of the call was.

What disclosures does the TSR require before or during a sales call?

The TSR requires specific spoken disclosures at the start of every telemarketing call. The caller must promptly and clearly state the identity of the seller, that the purpose of the call is to sell goods or services, and the nature of those goods or services ^[2]. "Promptly" means before any sales pitch, not buried after a five-minute presentation.

If the call involves a prize promotion, the telemarketer has to disclose that no purchase is necessary to win, that a purchase won't improve the odds, and the actual odds of winning. All of that has to come before asking the consumer to pay or hand over financial information.

Offers with negative-option features (where silence means agreement to be charged) require disclosure of all material terms before billing. The FTC has gone hard at negative-option practices lately, issuing a separate Negative Option Rule in 2024 that runs alongside the TSR and requires clear disclosure and easy cancellation ^[5].

The cost disclosure rule is simple in theory and trips up a lot of teams in practice. Before you take payment, disclose the total cost the consumer will incur, all material restrictions, and your refund and cancellation policy. Saying "you can cancel anytime" without explaining how cancellation actually works does not satisfy the rule.

Here's the one many teams miss. These disclosures apply even when the consumer initiates the call in response to an ad. An inbound call generated by a direct mail piece, a website, or a broadcast ad is still covered by the TSR if its purpose is to close a sale ^[2].

How does the TSR relate to the National Do Not Call Registry?

The National Do Not Call (DNC) Registry came out of the TSR amendments that took effect in 2003 ^[4]. Consumers register their numbers at donotcall.gov, and telemarketers have to stop calling those numbers within 31 days of registration.

The TSR requires a telemarketer to access the registry at least every 31 days and scrub the calling list against it before each campaign. The FTC charges a fee for registry data, currently $79 per area code per year as of 2024, subject to periodic adjustment, with an annual cap for organizations pulling all area codes ^[4]. Access is mandatory. "I didn't know that number was registered" is not a defense.

Three exceptions let you call a DNC-registered number: an established business relationship (within 18 months of a transaction or 3 months of an inquiry), prior express written consent from the consumer, and a call to the consumer's own business. The established business relationship exception sounds broader than it is. It covers only the specific company the consumer transacted with, not affiliates and not lead buyers downstream.

The FTC and FCC both enforce DNC rules, which creates overlap and some confusion. The FCC's TCPA-based DNC rules apply to wireless numbers, while the TSR applies more broadly. For a number that sits on the federal registry and is also covered by TCPA, you have to satisfy both frameworks. They are not identical, and clearing one does not clear the other.

For a closer look at what cold calling legally requires in practice, the cold calling framework page is a good place to start before you build out your TSR program.

What are the penalties for violating the Telemarketing Sales Rule?

Civil penalties under the TSR reach $51,744 per violation as of 2024 ^[6]. The FTC adjusts that number periodically under the Federal Civil Penalties Inflation Adjustment Act. Each call to a DNC-registered number counts as a separate violation. Run a 10,000-call campaign on a poorly scrubbed list and your theoretical exposure runs into the hundreds of millions, even if a real settlement lands far lower.

The FTC can seek civil penalties in federal court, and it does. In 2022 the agency obtained a $120 million judgment against a Florida telemarketer for DNC violations ^[7]. In 2023 it settled a case involving a health insurance telemarketer for $100 million. These are actual outcomes, not scare figures.

The FTC can also seek injunctive relief (an order to stop specific practices), disgorgement of profits, and consumer redress. Injunctions in telemarketing cases often include independent compliance monitors and multi-year reporting, and those ongoing costs can top the original monetary penalty.

State attorneys general can bring their own TSR actions. The Act explicitly lets states sue on behalf of their residents, and many AGs use it regularly alongside their own state telemarketing statutes ^[1]. A federal TSR claim and a parallel state claim can run at the same time.

Individual liability is real too. Corporate principals who knew about violations and had authority to stop them have been held personally liable. Forming an LLC and hoping it absorbs the risk does not shield a principal who is actively running the noncompliant practice.

How does the TSR differ from the TCPA?

The TSR and the TCPA cover overlapping ground, but different agencies issue them under different statutes with different enforcement mechanisms. Getting the distinction right matters for compliance planning.

The TCPA (47 U.S.C. 227) belongs to the FCC and focuses on the technology: automated dialers, prerecorded messages, and text messages. It creates a private right of action, so individual consumers can sue you directly in federal or state court for $500 to $1,500 per violation. That private-suit risk is the single biggest litigation driver for most small businesses ^[8].

The TSR is an FTC rule focused on the conduct and content of telemarketing: what you say, what you disclose, what payment methods you accept, and which numbers you're allowed to call. There is no private right of action under the TSR. The FTC sues you, not individual consumers. State AGs can sue too.

Most outbound programs have to comply with both. A call that uses an autodialer to a cell phone without prior express consent is a TCPA problem. A call to a DNC-registered number is a TSR problem and potentially a TCPA one. A call that misrepresents pricing is a TSR problem no matter how it was dialed.

The TSR also reaches the transaction itself (payment methods, refund policies) where the TCPA is silent. Think of the TCPA as rules about the pipe and the TSR as rules about everything moving through it.

For teams building cold call scripts, both frameworks shape what your reps are actually allowed to say.

Who does the Telemarketing Sales Rule apply to?

The TSR covers any "seller" or "telemarketer" involved in a telemarketing transaction. The FTC defines a seller as the entity that provides goods or services for payment and a telemarketer as the entity that initiates or receives calls as part of a plan to sell. Both can be liable. Hire a call center and both you and the call center can face TSR exposure for the same calls ^[2].

Some categories fall outside TSR coverage. Financial institutions subject to FTC jurisdiction have specific carve-outs. Most B2B calls are partially exempt, though the prohibited practices still apply in B2B contexts. Calls made in response to a general media ad, where the consumer is not responding to a direct mail piece or other targeted solicitation, get a partial exemption. Securities brokers regulated by the SEC or CFTC have their own carve-outs.

The partial B2B exemption is one of the most misread parts of the rule. The FTC has stated that the core prohibitions (misrepresentation, abusive practices, and the ban on deceptive prize promotions) apply even to calls between businesses. Only the disclosure requirements and the DNC provisions have reduced application in the B2B context. Lie to a business buyer about pricing, or call a business number on your own internal DNC list, and you still have a TSR problem.

Political campaign calls are generally not covered. Calls by tax-exempt nonprofits soliciting charitable donations are exempt, though for-profit companies calling on their behalf are not. Run a lead generation shop that sells leads to multiple buyers? The FTC has treated lead generators as telemarketers in enforcement actions, so "we just generate leads" is not a reliable shield.

What does complying with the Telemarketing Sales Rule actually require?

The FTC publishes a business guidance document titled "Complying with the Telemarketing Sales Rule" that lays out the practical requirements in plain language ^[2]. Here's what compliance looks like operationally.

DNC scrubbing: access the National DNC Registry at least every 31 days and remove registered numbers before calling. Pay the access fee. Log when you scrubbed and which version of the registry you used. Keep the records.

Internal DNC list: keep your own do-not-call list and honor it indefinitely. When a consumer asks not to be called again, honor that request within 30 days and keep it permanently. The request applies to the specific seller, more than the telemarketer making the call.

Caller ID: transmit your telephone number and the seller's name to caller ID services. Blocking caller ID or displaying a false number is a violation. The number you transmit has to be one a consumer can call back and reach during business hours.

Call timing: call only between 8 a.m. and 9 p.m. local time at the consumer's location. Not your time zone. Theirs.

Required disclosures: before the pitch, identify the seller, say you're selling something, and describe what it is. Before payment, disclose total cost, restrictions, and refund and cancellation terms.

Abandoned call rules: with a predictive dialer, no more than 3% of answered calls per 30-day campaign can be abandoned. Play a prerecorded disclosure within 2 seconds of the consumer's greeting. That message has to state the seller's name and phone number and give the consumer a way to opt out of future calls ^[3].

Record retention: the FTC requires telemarketers to keep advertising and promotional materials for 24 months and sales records (including DNC scrub dates) for 24 months.

Want a structured way to check your program against all of these? The LeadCompliant compliance kit covers TSR, TCPA, and state-level requirements in one checklist.

Wondering whether AI-assisted dialing changes any of this? It doesn't. The TSR does not care whether a human or a machine built the call list. The requirements attach to the campaign, not the technology. See AI cold calling for how automated systems interact with these rules.

What specific practices does the TSR prohibit outright?

Some TSR provisions go beyond disclosure and procedure. They're flat bans. Break one and you're looking at a per-call civil penalty regardless of context.

Prohibited payment methods (for most telemarketing transactions): remotely created payment orders, remotely created checks, and cash-to-cash wire transfers. Credit cards with express verifiable authorization, checks with proper authorization, and ACH with proper consent are fine. Congress and the FTC banned the others because fraud operations used them to grab money before consumers could dispute the charge ^[2].

Calling DNC-registered numbers without a valid exception. Each call is a separate violation.

Transmitting false or misleading caller ID. Spoofing a number is a TSR violation and potentially a violation of the Truth in Caller ID Act.

Providing substantial assistance to anyone you know, or consciously avoid knowing, is violating the TSR. This substantial-assistance provision is how the FTC reaches third-party service providers, lead vendors, and call centers who claim they had no idea their client was running a fraud.

Abandoning a call without playing the required message within 2 seconds.

Calling a consumer who already told this seller not to call again.

For-profit companies misrepresenting a charitable affiliation.

The FTC's guidance makes the stakes clear: violating "any provision" of the TSR creates civil penalty exposure ^[2]. There is no informal, warning-only category of TSR violation. Every one has a dollar value attached.

How does the FTC actually enforce the Telemarketing Sales Rule?

The FTC enforces the TSR through civil actions in federal district court and through administrative proceedings. It watches telemarketers using consumer complaints filed at ReportFraud.ftc.gov, investigates patterns in those complaints, and refers cases to the Department of Justice for civil penalty suits when warranted ^[6].

The agency runs coordinated sweeps with state AGs and international partners against illegal telemarketing. It has also partnered with phone carriers on call-blocking and call-labeling work under the TRACED Act. Carriers now flag and block calls based on patterns the FTC helps identify, which means TSR problems increasingly show up as call-labeling issues before they turn into enforcement actions.

Recent FTC enforcement leans toward large, headline cases. The $120 million judgment against a Florida operation in 2022, plus multiple nine-figure settlements in health insurance and home warranty, signal a focus on high-volume violators ^[7]. Small teams with a handful of bad calls are more likely to hear from a state AG than from the FTC directly, but that doesn't make the risk small. State AG cases routinely end in six and seven-figure settlements against small companies.

The FTC also uses notice-based theories. If you got a prior warning letter or were a party to a prior consent order, penalty calculations climb sharply. A second offense often carries penalties that are multiples of the first.

Worried about how your specific practices stack up? Read the FTC's business guidance document directly rather than a summary of it. The FTC publishes it at ftc.gov and updates it when the rules change ^[2].

Are there state telemarketing laws that go beyond the TSR?

Yes, and many are stricter. The TSR sets a federal floor. States can and do stack requirements on top. Florida, California, Texas, and New York all have their own telemarketing statutes with registration rules, extra disclosure mandates, and in some cases a private right of action the federal TSR lacks.

Florida's Telemarketing Act requires commercial telemarketers soliciting Florida residents to register with the state and post a bond. California's Consumers Legal Remedies Act and Unfair Competition Law can attach to the same conduct that violates the TSR, giving individual consumers a way to sue that federal law alone does not. New York's Do Not Call statute mirrors the federal registry but adds its own enforcement mechanisms and restrictions on upselling.

The takeaway for outbound teams: federal TSR compliance is necessary but not sufficient. Call into California, Florida, New York, or Texas and you need the state-specific overlays. Multi-state operations need a compliance matrix that maps each state's requirements against how you actually call.

State enforcement can move faster than the FTC because state AGs don't wait for a federal referral. Several have direct TSR enforcement authority and use it. A complaint from a Florida consumer to the Florida AG can turn into an investigation and a demand letter within weeks. The federal process takes longer, so for smaller operations, state enforcement is often the more immediate threat.

How do you build a TSR-compliant outbound calling program?

Start with the basics most teams skip. Pull the FTC's business guidance document and read it, not a summary ^[2]. It's written for non-lawyers. Then work backward from your actual call flow to find where you're exposed.

Here's a sequence that works for most small outbound teams:

1. Register for registry access at donotcall.gov and pay the fee. Set a calendar reminder to re-scrub every 31 days. Do not skip this. It's the single most common TSR enforcement trigger.

2. Build an internal DNC list from day one. Every "remove me" or "don't call again" goes on it. Honor it for the seller entity, more than the telemarketer making the call.

3. Script your openers to carry the required disclosures before the pitch. "Hi, this is [name] from [company], I'm calling to tell you about [product/service]" satisfies the identity and purpose requirement. Test your scripts against the disclosure checklist.

4. Set your dialer to restrict calls to 8 a.m. through 9 p.m. in the called party's time zone. Most cloud dialers have a time-zone-aware calling window. Turn it on.

5. If you use a predictive dialer, hold the abandoned call ratio below 3% per 30-day campaign and load a compliant recorded message for abandoned calls.

6. Audit your payment process. If you take phone payments, confirm the method is permitted under the TSR and that the cost and cancellation disclosures happen before you capture any payment information.

7. Train every rep on what they cannot say. Misrepresentation violations attach to the rep and the company both.

For a structured checklist covering all of this, including the state overlays, the LeadCompliant compliance kit is built for small outbound teams without in-house counsel.

Knowing what cold calling means in its broadest legal sense helps too, since the definition determines which rules apply to your program in the first place.

Frequently asked questions

What is the Telemarketing Sales Rule in simple terms?

The TSR is an FTC regulation that sets the rules for what telemarketers can and can't do when calling consumers to sell goods or services. It requires honest disclosures, bans certain abusive practices, enforces the National Do Not Call Registry, and restricts some payment methods. Violating it can cost up to $51,744 per call. It's been in effect since 1995 and applies to most outbound sales programs.

What is the telemarketing sales rule designed to accomplish?

The TSR is designed to stop deceptive and abusive telemarketing. That means callers have to honestly identify themselves and their purpose, misrepresentations about cost or prizes are banned, consumers get protection from unwanted calls through the DNC Registry, and the payment methods most tied to fraud are blocked. The enabling statute says Congress found these practices cause substantial consumer harm, and the rule is the mechanism to prevent it.

Does the Telemarketing Sales Rule apply to B2B calls?

Partially. B2B calls are exempt from the TSR's disclosure requirements and DNC provisions. But the core prohibitions (no misrepresentation, no abusive tactics, no deceptive prize promotions) still apply to calls made to businesses. If your reps lie about pricing to a business buyer, that's still a TSR problem. The exemption is narrower than most teams assume.

How often do you have to scrub against the National DNC Registry under the TSR?

At least every 31 days. The TSR requires telemarketers to access and scrub against the National Do Not Call Registry no less than every 31 days before initiating calls. You also pay the access fee at donotcall.gov. Missing the scrub window and calling a registered number is a standalone violation worth up to $51,744 per call.

What are the TSR's rules on call timing?

Calls are only permitted between 8 a.m. and 9 p.m. local time at the consumer's location. That means the consumer's time zone, not yours. A call from a company in California to a consumer in Florida must comply with Florida's local time window. Most predictive dialers can enforce this automatically if configured correctly.

What payment methods are banned under the Telemarketing Sales Rule?

The 2010 TSR amendments banned remotely created payment orders, remotely created checks, and cash-to-cash wire transfers as payment methods in most telemarketing transactions. These methods were banned because fraud operations used them to extract money before consumers could dispute charges. Credit cards with verifiable authorization, ACH with proper consent, and traditional checks with proper authorization remain permitted.

What disclosures are required at the start of a telemarketing call?

Before any sales pitch, the caller must clearly state who the seller is, that the purpose of the call is to sell goods or services, and what goods or services are being offered. Before accepting payment, the caller must disclose total cost, all material restrictions, and the refund or cancellation policy. These requirements apply even when a consumer calls in response to an advertisement.

What is the penalty for calling a number on the Do Not Call Registry?

Each call to a DNC-registered number without a valid exemption is a separate TSR violation. As of 2024, the maximum civil penalty is $51,744 per violation. The FTC has obtained judgments in the hundreds of millions of dollars against high-volume violators. State AGs can also bring parallel actions under their own telemarketing statutes for additional penalties.

What is the TSR's abandoned call rule for predictive dialers?

No more than 3% of answered calls in any 30-day campaign period can be abandoned, meaning no live agent connected. For any call that is abandoned, a prerecorded message must play within 2 seconds of the consumer's greeting. That message must state the seller's name and phone number and offer the consumer an opt-out mechanism for future calls.

How does the TSR interact with the TCPA?

They cover different dimensions of the same activity. The TCPA, administered by the FCC, regulates the technology: autodialers, prerecorded messages, and texts. It allows private lawsuits for $500 to $1,500 per violation. The TSR, administered by the FTC, regulates the conduct: disclosures, DNC compliance, payment methods, and misrepresentation. Only the FTC or state AGs can sue under the TSR. Most outbound programs must satisfy both.

Do inbound calls triggered by ads have to comply with the TSR?

Yes. If a consumer calls in response to a targeted advertisement (direct mail, an online ad, a broadcast solicitation) and the purpose of the call is to complete a sale, the TSR applies to that inbound call. The disclosure requirements, payment method rules, and prohibition on misrepresentation all apply. The common assumption that inbound calls are automatically exempt is wrong.

What records does the TSR require telemarketers to keep?

The TSR requires at least 24 months of record retention for advertising and promotional materials, records of prize winners in prize promotion contexts, all sales records, employee records for anyone involved in telemarketing, and documentation of DNC list access dates. The FTC can request these records during an investigation, and missing records can be treated as evidence of non-compliance.

Can individual sales reps be personally liable for TSR violations?

Yes. The FTC has pursued personal liability against individuals who had management authority and knew about violations. Forming a corporation or LLC does not shield a principal who was actively involved in noncompliant practices. Several high-profile TSR enforcement cases have resulted in personal judgments against company owners and call center managers alongside the corporate entities.

Where can I find the FTC's official guidance on complying with the Telemarketing Sales Rule?

The FTC publishes a document titled "Complying with the Telemarketing Sales Rule" at ftc.gov. It's the primary reference document for business compliance and is written in plain language for non-lawyers. The FTC also publishes the full text of the TSR at 16 C.F.R. Part 310. Both are free and public. Any compliance program should start with the primary source, not a third-party summary.

Sources

1. U.S. Congress, Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 6101-6108: The TSR is issued under 15 U.S.C. 6101-6108; Congress found that deceptive and abusive telemarketing acts cause substantial consumer harm; states have the right to sue under the Act.
2. Federal Trade Commission, Complying with the Telemarketing Sales Rule: Required oral disclosures at outset of call; cost disclosure requirement before payment; definition of seller and telemarketer; both seller and call center can face liability; prohibited payment methods.
3. Federal Trade Commission, Telemarketing Sales Rule, 16 C.F.R. Part 310: Abandoned call safe harbor: no more than 3% of answered calls per 30-day campaign; prerecorded message required within 2 seconds of consumer greeting.
4. Federal Trade Commission, National Do Not Call Registry: Registry created by 2003 TSR amendments; telemarketers must scrub every 31 days; $79 per area code per year access fee.
5. Federal Trade Commission, Negative Option Rule (2024 amendment): 2024 Negative Option Rule works alongside the TSR to require clear disclosure and easy cancellation for negative-option offers.
6. Federal Trade Commission, Enforcement: Maximum civil penalty under the TSR is $51,744 per violation as of 2024, adjusted periodically under the Federal Civil Penalties Inflation Adjustment Act; FTC refers civil penalty suits to the DOJ.
7. Federal Trade Commission, Press Releases: FTC obtained a $120 million judgment against a Florida telemarketer for DNC violations in 2022.
8. Federal Trade Commission, donotcall.gov Registry Access for Telemarketers: Telemarketers access the National DNC Registry at donotcall.gov and pay the per-area-code fee to obtain and use registry data.