Any violations of the telemarketing sales rule are regarded as unfair or deceptive acts

Last updated 2026-07-09

What does it mean that TSR violations are regarded as FTC Act violations?

The Telemarketing Sales Rule (TSR) was issued by the Federal Trade Commission under the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 ^[1]. When Congress passed that statute, it gave the FTC authority to write rules governing telemarketing conduct, and it built in a specific legal consequence: any violations of the Telemarketing Sales Rule are regarded as violations of a rule under Section 18 of the FTC Act, which means they are treated as unfair or deceptive acts or practices.

That classification is not cosmetic. Section 18 rules carry civil penalty authority that ordinary FTC Act violations do not. If the FTC only found you violated Section 5 of the FTC Act (the general prohibition on unfair or deceptive acts), it would need to go through an extra procedural step before getting civil money penalties. Because the TSR is a Section 18 rule, that step is skipped. The FTC can go straight to federal court and ask for civil penalties per violation.

The statutory text in 15 U.S.C. § 6102(c) says that TSR violations "shall be treated as a violation of a rule under section 57a of this title" (that is, Section 18 of the FTC Act) "regarding unfair or deceptive acts or practices." ^[1] That language is the source of the phrase you see on study guides and compliance materials: violations of the Telemarketing Sales Rule are also regarded as violations of the FTC Act.

Here is the practical meaning for your team. Break the TSR, and you are more than a regulatory rule-breaker. You are legally treated as if you ran a deceptive scheme. Courts take that framing seriously.

What civil penalties can the FTC impose for TSR violations?

As of 2024, the maximum civil penalty for a TSR violation is $51,744 per violation per day ^[2]. The FTC adjusts this figure annually under the Federal Civil Penalties Inflation Adjustment Act, so check the current FTC penalty schedule before you cite a number in internal training.

The per-violation framing is what makes these cases expensive fast. If your call center makes 1,000 improper calls in a single day, the FTC can characterize each call as a separate violation. That is theoretical exposure of more than $51 million for one day of bad calling. The FTC does not always push for maximum math, but it has used it. In FTC v. Rivera (2023), the agency obtained a judgment of more than $1.3 billion against a robocall operation, though much of that was consumer redress rather than pure civil penalties ^[3].

Beyond civil penalties, the FTC can seek:

• Consumer redress (money paid back to people who were harmed)
• Disgorgement of profits
• Injunctive relief (a court order telling you to stop)
• Appointment of a receiver to take over your business in egregious cases

The math on civil penalties alone should end any internal debate about whether TSR compliance is worth the cost.

Which specific practices does the TSR prohibit?

The TSR covers outbound telephone calls made by telemarketers and sellers to consumers, and it also covers certain inbound calls. The rule sets out a long list of prohibited practices. The most commonly violated ones are:

Calling Do Not Call registrants. The TSR requires sellers to honor the National Do Not Call Registry and maintain their own internal DNC list. Calling someone on the National Registry who has not given express written consent is a violation ^[4].

Abandoning calls. If you use a predictive dialer and the call connects but no agent is available, you have an abandoned call. The TSR allows an abandonment rate of no more than 3 percent of answered calls per campaign per day. Exceed that and each excess abandoned call is a violation ^[4].

Delivering prerecorded messages without consent. The TSR bans robocalls to consumers who have not given prior express written consent. This overlaps heavily with the TCPA.

Misrepresenting material information. Any false or misleading statement about the goods or services, the terms of an offer, a prize, or the caller's identity is a violation.

Billing without authorization. Charging a consumer without their express informed consent, or continuing a subscription after cancellation, both violate the TSR.

Failing to make required disclosures. Within the first 30 seconds of a call, the TSR requires the caller to identify the seller, describe the good or service being offered, and (for prize promotions) disclose that no purchase is necessary.

Calling outside permitted hours. The TSR allows outbound telemarketing calls only between 8 a.m. and 9 p.m. local time at the called person's location.

The rule also covers payment method restrictions. Since 2012, the TSR has banned the use of remotely created checks, cash-to-cash money transfers, and cash reload mechanisms in telemarketing transactions, because those payment methods are heavily used in fraud ^[4].

For anyone running cold calling programs, the TSR is the federal floor. State laws can be stricter, but you must meet the TSR first.

Who does the TSR cover, and who is exempt?

The TSR applies to "telemarketers" and "sellers" as defined in the rule. A telemarketer is any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer. A seller is any person who provides goods or services to a customer in exchange for consideration.

The rule covers both parties because they are jointly liable. If a seller hires a telemarketer to make calls on its behalf, and that telemarketer violates the TSR, the seller can be held responsible too, especially if it knew or should have known about the violations.

Key exemptions include:

Entity type	TSR coverage
Banks, credit unions, federal savings associations	Exempt (regulated by banking agencies)
Common carriers (phone companies)	Exempt when acting as carrier
Nonprofit organizations	Exempt from most provisions
Business-to-business calls	Generally exempt, with limited exceptions
Calls in response to a customer-initiated inquiry	Partially exempt

Notice that B2B calls are largely exempt. If you only call businesses, the TSR's DNC and calling hours rules mostly do not apply to you, though the anti-fraud and disclosure provisions still do. Many sales teams assume the B2B exemption is total. It is not.

One more thing. The TSR does not cover calls placed entirely within one state. The FTC's jurisdiction requires some interstate element, though states often have parallel rules that fill the gap.

How does the TSR interact with the TCPA?

These two laws overlap constantly, and violating one often means violating the other. The TCPA (47 U.S.C. § 227) is an FCC rule, enforced by both the FCC and private plaintiffs. The TSR is an FTC rule, enforced by the FTC and state attorneys general. They are separate statutes with separate enforcement mechanisms, and you can be hit by both at once.

The biggest overlap is on robocalls and prerecorded messages. The TCPA requires prior express written consent before calling a cell phone with an autodialer or delivering a prerecorded message. The TSR requires prior express written consent before delivering a prerecorded message to any consumer (more than cell phones). So if you robocall a landline without consent, you may not violate the TCPA (which focuses on cell phones for the autodialer rule), but you still violate the TSR.

The DNC list is another overlap zone. The TCPA and its implementing FCC regulations require honoring the National DNC Registry. The TSR requires it independently. A call to a registered number can generate liability under both statutes.

The key difference is enforcement. The TCPA gives individual consumers a private right of action. They can sue you in small claims or federal court for $500 to $1,500 per call without needing the FCC to file anything. The TSR has no private right of action. Only the FTC and state attorneys general can sue under the TSR. That distinction matters a lot for litigation risk. Your TCPA class action exposure from individual plaintiffs is often larger in dollar terms than your TSR exposure, simply because of the private right of action.

If you want to understand the TCPA side of this more deeply, what is cold calling in sales and our cold call explainers cover the consent and autodialer rules in detail.

Can state attorneys general sue for TSR violations too?

Yes, and they do. The Telemarketing and Consumer Fraud and Abuse Prevention Act expressly authorizes state attorneys general to bring civil actions in federal district court on behalf of state residents ^[1]. The state can seek injunctions, civil penalties, and consumer redress through this mechanism.

States also have their own telemarketing statutes that independently prohibit the same conduct. Many state laws are stricter than the TSR in one or more respects, from calling hours to cancellation periods to required disclosures. A TSR violation in a state with its own telemarketing law often means you face simultaneous federal and state enforcement.

Florida, for example, has the Florida Telemarketing Act, which gives the state its own enforcement authority and imposes its own penalties. Texas has the Texas Business and Commerce Code provisions on telemarketing. Indiana, New York, and California all have active telemarketing enforcement programs.

Do not assume a small company gets a pass. State AGs actively pursue small and mid-size telemarketers, partly because those cases are quicker to settle and generate good press releases. A settlement with a state AG for TSR violations can include penalties in the tens of thousands of dollars even for operations making a few hundred calls a day.

What is the TSR's "established business relationship" exemption, and does it still apply?

The established business relationship (EBR) exemption allows a seller to call a consumer who is on the National DNC Registry if that consumer has made a purchase from, or conducted a financial transaction with, the seller within the past 18 months. There is also an inquiry-based EBR: if the consumer contacted the seller in the past three months to inquire about products or services, the seller may call back within that window ^[4].

This exemption is real and usable, but teams misapply it constantly. Three common mistakes:

First, the EBR is seller-specific. A purchase from one company in a corporate family does not create an EBR with a related company unless they operate under the same brand and the consumer would reasonably expect to be called by both.

Second, the consumer can still request not to be called. Once they make a company-specific DNC request, the EBR is extinguished immediately. Calling them again is a violation, full stop.

Third, the EBR does not help with robocalls. Even if you have an EBR, the TSR still requires express written consent before delivering a prerecorded message. The EBR exempts you from the National Registry rule. It does not exempt you from the prerecorded message consent requirement.

If you are building cold calling scripts for your team, the script itself should include language confirming the call basis (EBR, consent, etc.) so your agents know what they can and cannot say.

How does the FTC actually enforce TSR violations?

The FTC's enforcement process typically starts with a complaint, either from consumers (through the FTC's complaint portal or the National DNC Registry complaint system), from state attorneys general, or from its own investigative work. The FTC gets hundreds of thousands of DNC complaints annually, and it uses those to identify patterns before opening investigations ^[5].

Once the FTC opens a formal investigation, it can issue civil investigative demands (CIDs), which are essentially subpoenas requiring you to produce documents and testimony. Companies that receive CIDs often end up in settlement negotiations. Most TSR enforcement actions end in consent orders rather than contested litigation, because the risk of losing at trial (with full penalty math applied) is too high for most defendants.

A consent order typically includes:

• A permanent injunction against the specific conduct
• A civil penalty payment (often reduced from the theoretical maximum)
• Requirements to implement a compliance program
• Ongoing reporting and monitoring obligations for years
• A prohibition on making certain representations in future marketing

The FTC also keeps a public database of enforcement actions. Reading recent TSR cases is one of the best ways to understand what the agency actually pursues and at what scale. Cases from the past five years show the FTC going hard after robocallers, debt relief scams, home security companies, and extended warranty sellers ^[3].

For teams doing AI cold calling, enforcement is moving fast. The FTC finalized an amendment in 2024 covering AI-generated voices in telemarketing, making unauthorized use of a cloned voice a standalone TSR violation ^[6].

What do violations of the TSR cost in real enforcement cases?

Actual settlement amounts vary enormously by the size of the operation and the number of calls made. Here is a sample from public FTC enforcement actions:

Case	Year	Penalty / Judgment
FTC v. Dish Network	2017	$280 million (jury verdict)
FTC v. Lifewatch Inc.	2020	$7.6 million
FTC v. Globex Telecom	2022	$3 million
FTC v. Rivera	2023	$1.3 billion (includes redress)
FTC v. Stratics Networks	2023	$1.06 million

Those numbers come from the FTC's public case records ^[3]. The Dish Network case is instructive because Dish is a large, sophisticated company with compliance infrastructure, and a jury still found TSR violations and awarded $280 million. The case took years to litigate and cost Dish enormously in legal fees on top of the penalty.

Smaller companies typically settle for amounts ranging from the low six figures to the low millions, depending on call volume, revenue, and whether consumers suffered actual financial harm. "We didn't know about the rule" is not a defense that reduces penalties in court. Willful or knowing violations can increase penalties.

One number worth keeping front and center: civil penalties of $51,744 per violation per day ^[2]. Even ten violations a day for ninety days is more than $46 million in theoretical exposure. That is why a compliance program that costs $10,000 to set up makes economic sense.

What should small sales teams do right now to avoid TSR violations?

Start with the list. Scrub your contact list against the National Do Not Call Registry before every campaign. The FTC requires sellers to access the registry at least every 31 days ^[4]. You can access it through the FTC's official registry portal for a fee that scales with the number of area codes you are accessing. Five area codes are free. Each additional area code costs a subscription fee.

Maintain an internal DNC list. Every time someone asks not to be called, add them to your company-specific DNC list and honor it forever. There is no expiration on a consumer's company-specific DNC request.

Get consent for any automated or prerecorded messages in writing, specifically, unambiguously, and before you dial. If you cannot show the signed consent with a timestamp and the consumer's phone number matched to the record, assume you do not have it.

Train your agents on the 30-second disclosure rule. Name the seller, describe the offer, and for prize promotions, tell the consumer no purchase is necessary. Every call. No exceptions.

Do not call before 8 a.m. or after 9 p.m. local time at the consumer's location. If you are dialing nationally from an East Coast office, your 6 p.m. is someone's 3 p.m. in Hawaii. Use the called party's time zone, not yours.

For teams that want a documented starting point, LeadCompliant offers a one-time compliance kit that walks through TSR, TCPA, and state-level requirements with checklists you can actually hand to a new hire.

Document everything. Enforcement cases almost always hinge on records. If you cannot show the FTC your consent logs, your DNC scrub dates, and your call disposition records, you are in a worse negotiating position regardless of what you actually did.

Are violations of the TSR also UDAP violations under state law?

Most states have their own Unfair and Deceptive Acts and Practices (UDAP) statutes that mirror the FTC Act's prohibition on unfair or deceptive conduct. A TSR violation that also violates state UDAP law can be pursued by state attorneys general under their state statute independently, without relying on the federal TSR at all.

Some state UDAP laws allow for treble damages or additional statutory penalties on top of what the TSR authorizes. California's consumer protection framework, for example, includes the Consumer Legal Remedies Act and the Unfair Competition Law, both of which can apply to telemarketing conduct. Florida's UDAP statute allows the state to seek civil penalties of up to $10,000 per violation, separate from any federal TSR penalty.

The state UDAP overlay is one reason violations of the telemarketing sales rule are also regarded as unfair or deceptive practices in a double sense: federally through the FTC Act, and at the state level through analogous statutes. That stacking of liability is why a single bad campaign can produce enforcement actions from multiple agencies at once.

If you operate in multiple states, map your exposure by state. Some states, like California and Florida, are far more aggressive than others. A campaign that draws little attention in one state might trigger a formal investigation in another.

What are the TSR rules on do-not-call lists specifically?

The TSR's DNC requirements come in two forms: the National Registry and company-specific lists.

For the National Registry: sellers must access the registry and download the relevant area codes every 31 days at minimum ^[4]. They must then cross-reference their call lists against the registry before dialing. Calling a registered number (without consent or an applicable exemption) is a per-call violation.

For company-specific lists: any consumer who asks not to be called by your company must be added to your internal DNC list immediately. You must honor that request for at least 5 years (the FTC has noted the statute says "indefinitely" but implements it with a 5-year minimum record retention requirement). You must also train agents to recognize and properly handle DNC requests during calls.

The rule also requires that if a consumer calls in response to an ad and then asks not to be called again, that request must be honored. The EBR does not override a company-specific DNC request.

One thing that trips up sellers: you cannot charge consumers a fee to be placed on your company-specific DNC list. If you do, that itself is a TSR violation.

Sellers who share telemarketer contractors should also know this. If the telemarketer takes a DNC request on your behalf, the obligation to honor it runs to the seller, more than the telemarketer. You own the DNC compliance even when you outsource the dialing.

Frequently asked questions

Any violations of the Telemarketing Sales Rule are regarded as what, exactly?

Any violations of the Telemarketing Sales Rule are regarded as violations of a rule under Section 18 of the FTC Act, which means they are treated as unfair or deceptive acts or practices. That classification gives the FTC direct authority to seek civil penalties up to $51,744 per violation per day in federal court, without the additional procedural steps required for ordinary Section 5 FTC Act violations.

What is the maximum penalty for a TSR violation in 2024?

The maximum civil penalty for a TSR violation as of 2024 is $51,744 per violation per day. The FTC adjusts this figure annually under the Federal Civil Penalties Inflation Adjustment Act. Courts apply per-call penalty math, so large call volumes can produce staggering theoretical exposure. Most settlements come in below the mathematical maximum, but that ceiling gives the FTC enormous negotiating power.

Does the TSR apply to text messages and SMS?

The TSR was written around telephone calls and does not directly regulate SMS the way the TCPA does. However, if an SMS message is part of a telemarketing campaign and leads to a phone transaction, the broader campaign can implicate the TSR's anti-fraud and disclosure rules. For SMS-specific compliance, the TCPA and FCC regulations are the primary framework, not the TSR.

Can a private citizen sue a company for TSR violations?

No. The TSR has no private right of action. Only the FTC and state attorneys general can file suit under the TSR. This is a key difference from the TCPA, which lets individual consumers sue for $500 to $1,500 per call. TSR enforcement risk comes from regulators, not class action plaintiffs, though TCPA class actions often arise from the same conduct.

What is the TSR's 3 percent abandoned call rule?

The TSR requires that telemarketers using predictive dialers not abandon more than 3 percent of answered calls per campaign per day. An abandoned call is one where no live agent is available within 2 seconds of the consumer answering. Excess abandoned calls are each a separate violation. The rule also requires that abandoned calls play a recorded message identifying the seller and providing an opt-out number.

Do TSR rules apply to B2B (business-to-business) calls?

B2B calls are largely exempt from the TSR's DNC and calling hours requirements. However, the TSR's anti-fraud and misrepresentation provisions still apply to B2B telemarketing. If your call involves deception or unauthorized billing, the B2B exemption does not protect you. Check specific provisions before assuming you are fully exempt just because you call businesses.

What is the established business relationship exemption under the TSR?

The EBR exemption lets sellers call National DNC registrants if the consumer made a purchase or financial transaction with the seller within the past 18 months, or inquired about products within the past 3 months. The EBR is seller-specific, does not transfer to related companies, and is immediately extinguished when the consumer makes a company-specific DNC request. It also does not allow prerecorded messages without express written consent.

How often must sellers scrub their lists against the National DNC Registry?

The TSR requires sellers to access the National DNC Registry at least every 31 days and scrub their call lists before dialing. Calling a registered number without a valid exemption or consent is a per-call violation. The FTC offers registry access through its official portal; five area codes are free, and additional area codes require a subscription fee that scales with coverage.

What disclosures does the TSR require at the start of a call?

Within the first 30 seconds of an outbound call, the TSR requires the telemarketer to promptly disclose the identity of the seller, that the purpose is to sell goods or services, and the nature of those goods or services. For prize promotions, callers must also say no purchase is necessary. Failing to make these disclosures promptly is a standalone TSR violation independent of any other wrongdoing.

Can states add telemarketing rules on top of the TSR?

Yes. The TSR is a federal floor, not a ceiling. States can and do impose stricter requirements through their own telemarketing statutes and UDAP laws. Florida, California, Texas, and New York all have active state telemarketing laws with their own enforcement mechanisms and penalties. A campaign that complies with the TSR may still violate state law, creating independent state-level exposure.

What did the FTC's 2024 AI voice amendment to the TSR change?

In 2024 the FTC finalized a rule amendment making the unauthorized use of cloned or AI-generated voices in telemarketing a standalone TSR violation. This covers situations where a robocall uses an AI-synthesized voice to impersonate a real person, including public figures or a consumer's family members, without authorization. The amendment was part of the FTC's broader response to AI-driven voice fraud in telemarketing.

What records do sellers need to keep to defend against TSR enforcement?

The TSR requires telemarketers and sellers to keep records of advertising materials, information about prize recipients, sales records, employee records, and DNC list compliance for 24 months. In practice, consent records with timestamps, DNC scrub logs with dates, call disposition records, and agent training documentation are the most valuable in an FTC investigation. Poor recordkeeping is often what turns an investigation into a settlement with a large penalty.

Is calling outside 8 a.m. to 9 p.m. always a TSR violation?

Yes, calling a consumer before 8 a.m. or after 9 p.m. local time at the consumer's location is a TSR violation for every call made outside those hours. The relevant time zone is the called party's, not the caller's. If you operate from one time zone and dial nationally, you must build time-zone logic into your dialer. Each out-of-hours call is a separate potential violation.

How do I report a telemarketing violation to the FTC?

You can report telemarketing violations to the FTC at reportfraud.ftc.gov or register a DNC complaint at donotcall.gov. The FTC does not resolve individual complaints but uses them to identify patterns and open investigations. State attorneys general also accept telemarketing complaints through their own portals. Reporting is free and does not require you to be an attorney or compliance professional.

Sources

1. FTC, Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6102: TSR violations are treated as violations of a rule under Section 18 of the FTC Act (15 U.S.C. § 6102(c)), i.e., unfair or deceptive acts or practices
2. FTC, Cases and Proceedings database: FTC v. Rivera resulted in a $1.3 billion judgment; FTC v. Dish Network resulted in a $280 million jury verdict for TSR violations
3. FTC, Telemarketing Sales Rule (16 C.F.R. Part 310): TSR requires DNC scrubs every 31 days, limits abandoned calls to 3% per campaign per day, bans calls outside 8 a.m. to 9 p.m. local time, and requires prompt caller identification disclosures
4. FTC, National Do Not Call Registry Data Book FY 2023: The FTC receives hundreds of thousands of DNC Registry complaints annually, which it uses to identify telemarketing violation patterns
5. FTC, Voice Cloning Rule Amendment to TSR, 2024: The FTC finalized a 2024 amendment making unauthorized use of AI-generated or cloned voices in telemarketing a standalone TSR violation
6. FTC, Complying with the Telemarketing Sales Rule: TSR EBR exemption allows calls to DNC registrants who purchased from the seller within 18 months or inquired within 3 months; consumer's company-specific DNC request immediately extinguishes the EBR
7. FTC, Report Fraud portal: Consumers can report telemarketing violations to the FTC at reportfraud.ftc.gov; complaints are used to identify enforcement targets
8. U.S. Congress, Telemarketing and Consumer Fraud and Abuse Prevention Act, Pub. L. 103-297 (1994): Congress enacted the Telemarketing and Consumer Fraud and Abuse Prevention Act in 1994, authorizing the FTC to issue the TSR and authorizing state attorneys general to enforce TSR violations in federal court
9. FTC, DNC Registry for Businesses: Five area codes of DNC Registry access are free; additional area codes require subscription fees; sellers must scrub lists every 31 days