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