Opinion 06-1

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Thomas P. Rowan
Attorney
600 Pennsylvania Ave., N.W., Room 286
Washington, D.C. 20580
trowan@ftc.gov
202-326-3302
May 31, 2006
Mr. Jerry Cerasale
Senior Vice President
Government Affairs
Direct Marketing Association
1111 19th Street, N.W., Suite 1100
Washington, D.C. 20036-3603
Re: 	Request for Advisory Opinion Concerning Upselling and Certain Exemptions to the
Telemarketing Sales Rule
Dear Mr. Cerasale:
This staff advisory opinion responds to your letter of April 3, 2006, seeking informal
clarification of whether the telemarketing program it describes (“marketing program” or
“program”) constitutes “upselling” under the Telemarketing Sales Rule (“TSR” or “the Rule”),
16 C.F.R. Part 310. As you noted in your letter, if the program does not constitute upselling,
calls made as part of the program may be exempt from the Rule under Sections 310.6(b)(4) and
(5), 16 C.F.R. §§ 310.6(b)(4) and (5).
Based on your description, our conclusion is that the program does constitute upselling
and is not exempt from the Rule. The opinions expressed in the following discussion of the basis
for this conclusion are those of Commission staff only and are not attributable to, nor binding on,
the Commission itself or any individual Commissioner.
Rule Provisions
The TSR defines “upselling” to mean:
soliciting the purchase of goods or services following an initial
transaction during a single phone call. The upsell is a separate
telemarketing transaction, not a continuation of the initial
transaction. An “external upsell” is a solicitation made by or on
behalf of a seller different from the seller in the initial transaction.
An “internal upsell” is a solicitation made by or on behalf of the
same seller as in the initial transaction, regardless of whether the

Mr. Jerry Cerasale
Direct Marketing Association
May 31, 2006 - Page 2
initial transaction and subsequent solicitation are made by the
same telemarketer.
16 C.F.R. § 310.2(dd). Upselling is the “direct solicitation for a product or service other than
that for which the consumer initiated the call.” Statement of Basis and Purpose (“SBP”)
accompanying the amended Rule, 68 Fed. Reg. 4656, Jan. 29, 2003. Upselling is subject to each
of the Rule’s requirements except the Do Not Call provisions, 16 C.F.R. § 310.4(b)(1)(iii), and
calling time restrictions, 16 C.F.R. § 310.4(c). SBP, 68 Fed. Reg. 4596.
Certain types of calls are exempt from the Rule. See 16 C.F.R. 310.6. These include:
telephone calls initiated by a customer or donor “that are not the result of any solicitation by a
seller, charitable organization, or telemarketer . . .” or that are “in response to an advertisement
through any medium other than direct mail solicitation . . ..” 16 C.F.R. §§ 310.6(b)(4) and (5).
These exemptions do not apply “to any instances of upselling included in such telephone
calls.” Id.
Discussion
The program you describe in your letter is one whereby DMA members market products
through relationships with financial institutions, such as banks and mortgage companies.
Specifically, you state:
The marketing program involves an inbound call from a customer
of the . . . [financial institution] to the . . . [financial institution]
where the customer requests account, transaction, balance and/or
payment information. After responding to the customer’s request,
the . . . [financial institution] highlights a service offering and asks
the customer if he/she would like to hear more about it. If the
customer says yes, the call is transferred to the Member. The
customer’s call initially might be answered and transferred to the
Member via an individual or a voice response unit.
FTC staff’s opinion is that the member in this scenario is engaged in upselling. The
member is soliciting the purchase of goods or services following an initial transaction during a
single phone call. See 16 C.F.R. § 310.2(dd). The initial transaction involves an inbound call to
a financial institution by a customer seeking account or other similar information. The
Commission contemplated such a transaction as a precursor to an upsell. The Commission stated
in the SBP: “The term ‘initial transaction’ is intended to describe any sort of exchange between
a consumer and a seller or telemarketer, including but not limited to . . . customer service calls
initiated by . . . the consumer . . ..” SBP, 68 Fed. Reg. 4596.1
1 See SBP, 68 Fed. Reg. 4597 n.180 (“‘The upsell can follow either a sales call or a
call related to customer service, such as a call about an account payment or product repair

Mr. Jerry Cerasale
Direct Marketing Association
May 31, 2006 - Page 3
DMA argues that the member is not engaged in upselling because the initial transaction
does not involve a “seller” as that term is defined in the Rule. We disagree with this assertion.
While the upselling definition includes language describing two types of upsells in which the
initial transaction involves a seller, the first sentence of the definition – “[u]pselling means
soliciting the purchase of goods or services following an initial transaction during a single
telephone call” – is sufficiently broad to include other scenarios. See 16 C.F.R. § 310.2(dd). In
our view, the meaning of the term “initial transaction” is not narrowly restricted to sales or the
consummation of other types of contracts, but instead, as indicated by the SBP, broadly reaches
to include such exchanges as completed customer service calls. Therefore, we believe that the
scenario described in the DMA letter constitutes “upselling” under Section 310.2(dd).
In addition, we believe that DMA’s interpretation of the TSR’s upselling provisions is
inconsistent with the provisions’ underlying purpose: “to ensure that consumers in upselling
transactions receive the same information and protections as consumers in other telemarketing
transactions subject to the Rule.” See SBP, 68 Fed. Reg. 4596. From the consumer’s standpoint,
there is little or no material difference between an upsell and an outbound telemarketing call:
[T]he consumer is hearing the terms of the upsell offer for the first
time on the telephone. The consumer has not had an opportunity
to review and consider the terms of the offer in a direct mail piece,
or to view an advertisement and gather information on pricing or
quality of the particular good or service before determining to
make the purchase.
Id at 4597.
The consumer encountering the marketing program described in your letter is in this
position. The consumer receives the offer by phone and has not had the opportunity to review
the terms of the offer in writing or to gather information on the pricing or quality of the good or
service. In addition, because the member may have access to the consumer’s financial
information through its relationship with the financial institution, the consumer is particularly
vulnerable to financial injury. As the Commission noted in the SBP: “[l]aw enforcement
experience indicates that the fact that the consumer has already provided or authorized use of his
or her billing information in an initial transaction may actually result in greater risk or abuse
during the second transaction.” Id. at 4597-98 n.192.
The TSR provides important protections for the consumer presented with the described
marketing program. Among other things, the Rule requires disclosure of all information material
to the consumer’s decision to accept the offer before the consumer authorizes payment for the
purchase. See 16 C.F.R. §§ 310.3(a)(1) and 310.4(d). It also requires the member to obtain
. . ..’”)(quoting the National Association of Attorneys General Comment on the January 30, 2002
Notice of Proposed Rulemaking accompanying the proposed amended TSR).

Mr. Jerry Cerasale
Direct Marketing Association
May 31, 2006 - Page 4
express, informed consent before submitting the consumer’s billing information for payment.
See 16 C.F.R. § 310.4(a)(6). In our view, the Rule cannot be interpreted in a manner that would
result in the removal of these protections for consumers confronted by marketing scenarios like
the one described in your letter. Moreover, TSR coverage of upsells in the scenario you describe
requires no more than basic fair dealing with consumers, and imposes no undue burden on the
upseller.
Conclusion
FTC staff’s opinion is that the described marketing program constitutes upselling and is
not exempt from the TSR. The member is soliciting the purchase of goods or services following
an initial transaction during a single phone call. The term “initial transaction” includes
completed customer service calls. Moreover, the purpose of the upselling provisions is to cover
the type of marketing program described in your letter. The TSR makes clear that, absent any
other safeguards, the Rule’s most basic protections apply to consumers who are initially solicited
to purchase goods and services over the telephone. As the consumers in the marketing program
you describe fall into this category, they should receive the Rule’s protections.
I hope this discussion is helpful to you and to DMA’s members. If you have any further
questions, please do not hesitate to contact me.
Sincerely,
Thomas P. Rowan
Staff Attorney