[Federal Register Volume 89, Number 42 (Friday, March 1, 2024)]
[Rules and Regulations]
[Pages 15017-15031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04335]


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FEDERAL TRADE COMMISSION

16 CFR Part 461

RIN 3084-AB71


Trade Regulation Rule on Impersonation of Government and 
Businesses

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: This final rule prohibits the impersonation of government, 
businesses, and their officials or agents in interstate commerce. This 
document contains the text of the final rule and the rule's Statement 
of Basis and Purpose (``SBP''), including a Regulatory Analysis.

DATES: This rule is effective April 1, 2024.

FOR FURTHER INFORMATION CONTACT: Christopher E. Brown (202-326-2825), 
Attorney, Division of Marketing Practices, Bureau of Consumer 
Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

A. Advance Notice of Proposed Rulemaking

    On December 23, 2021, the Federal Trade Commission (``Commission'' 
or ``FTC'') published an advance notice of proposed rulemaking 
(``ANPR'') to address certain deceptive or unfair acts or practices of 
impersonation.\1\ As part of the ANPR, the Commission requested comment 
on any issues or concerns relevant or appropriate to this rulemaking to 
combat impersonation of governments, businesses, or their agents, and 
whether and how to proceed with a notice of proposed rulemaking 
(``NPRM'').\2\ The Commission took comments for 60 days, and received 
164 comments from representatives from a broad spectrum of businesses, 
trade associations, government or law-enforcement organizations, and 
individual consumers, which are publicly available on this rulemaking's 
docket at https://www.regulations.gov/docket/FTC-2021-0077/comments. 
Commenters generally expressed support for the Commission's proceeding 
with the rulemaking. They also voiced deep concerns about the 
prevalence and harmfulness of both government and business 
impersonation. No commenter expressed the view that the Commission 
should not commence the rulemaking. Commenters also offered suggestions 
for the Commission's consideration in drafting the proposed rule and 
other recommendations in furtherance of the proposed rulemaking.

B. Notice of Proposed Rulemaking

    Based on an extensive review of the comments received in response 
to the ANPR, the Commission's own history of enforcement, and other 
considerations that occurred after the ANPR's publication,\3\ the 
Commission published the NPRM on October 17, 2022.\4\ In the

[[Page 15018]]

NPRM, the Commission stated it has reason to believe impersonation of 
government, businesses, and their officials or agents is prevalent.\5\ 
The Commission identified no disputed issues of material fact based on 
the comment record; explained its considerations in developing the 
proposed rule; solicited additional public comment thereon, including 
posing specific questions designed to assist the public in submitting 
comment; and provided interested parties the opportunity to request to 
present their position orally at an informal hearing.\6\ Finally, the 
NPRM set out the Commission's proposed rule.
    In response to the NPRM, the Commission received 78 comments from 
entities and individuals interested in the proposed rule, discussed in 
Section III.\7\ Although some raised concerns and recommended specific 
modifications or additions to the Commission's proposal, the majority 
generally supported the rule proposed in the NPRM. Two commenters 
timely submitted requests for interested parties to make an oral 
statement at an informal hearing.\8\

C. Notice of Informal Public Hearing

    On March 30, 2023, the Commission published an Initial Notice of 
Informal Hearing (``Notice of Hearing'').\9\ The Notice designated the 
Commission's Chief Administrative Law Judge, D. Michael Chappell, to 
serve as the presiding officer of the informal hearing and stated that 
any member of the public wishing to speak at the informal hearing or 
make a documentary submission to be placed on the public rulemaking 
record (or both) should submit a comment on or before April 14, 
2023.\10\
    On May 4, 2023, Chief Judge Chappell presided over the informal 
hearing using video conferencing, which enabled the public to watch 
live from the Commission's website, https://www.ftc.gov. Because there 
were no disputed issues of material fact to resolve, the informal 
hearing included no cross examination or rebuttal submissions, and the 
presiding officer made no recommended decision. The informal hearing 
included oral statements from 14 interested parties.\11\ The majority 
of commenters who presented oral statements at the informal hearing or 
filed documentary submissions generally expressed strong support for 
the Commission's proposed rule.\12\ Several commenters, however, also 
expressed concern that the proposed rule language does not explain the 
circumstances under which the Commission would apply proposed Sec.  
461.4, which would prohibit providing the means and instrumentalities 
to commit violations of government and business impersonation. Some 
suggested alternative language imposing a scienter requirement to 
narrow the scope of this provision, discussed in Section III.D.
    In crafting the final rule, the Commission has carefully considered 
the comments received in response to the NPRM and on the rulemaking 
record, which includes the oral statements and documentary submissions 
in response to the Notice of Hearing. The final rule contains some 
changes from the proposed rule. These modifications, discussed in 
detail in Section III, are based upon input from commenters and careful 
consideration of relevant law. Section III also discusses commenters' 
recommendations that the Commission declined to adopt, along with the 
Commission's reasons for rejecting them. Accordingly, the Commission 
adopts the proposed rule with limited modifications as discussed below. 
The rule will take effect April 1, 2024.

II. The Legal Standard for Promulgating the Rule

    The Commission is promulgating 16 CFR part 461 pursuant to section 
18 of the FTC Act, 15 U.S.C. 57a, the Administrative Procedure Act 
(``APA''), and Part 1, subpart B of the Commission's Rules of 
Practice.\13\ This authority permits the Commission to promulgate, 
modify, and repeal trade regulation rules that define with specificity 
acts or practices that are unfair or deceptive in or affecting commerce 
within the meaning of section 5(a)(1) of the FTC Act, 15 U.S.C. 
45(a)(1).
    The Commission's Rules of Practice further provide that if the 
Commission determines to promulgate a rule, it will adopt a SBP, which 
must address three factors: (1) The prevalence of the acts or practices 
addressed by the rule; (2) the manner and context in which the acts or 
practices are unfair or deceptive; and (3) the economic effect of the 
rule, taking into account the effect on small businesses and 
consumers.\14\ In this section of the preamble, the Commission 
summarizes its findings regarding each of these factors.

A. Prevalence of Acts or Practices Addressed by the Rule

    In its ANPR, the Commission cited public data from the Consumer 
Sentinel Network database and described its enforcement record, 
demonstrating government and business impersonation scams are not only 
highly prevalent but increasingly harmful.\15\ In the NPRM, the 
Commission also took notice of additional indications of prevalence 
that came after the ANPR's publication.\16\ Specifically, the NPRM 
cited data from a broad spectrum of commenters (businesses, trade 
associations, and government or law-enforcement organizations) 
regarding the prevalence of government and business impersonation 
scams, which echoed the Commission's findings that these schemes are 
among the most common deceptive or unfair practices affecting U.S. 
consumers and businesses and continue to be a significant source of 
consumer injury.\17\

B. Manner and Context in Which the Acts or Practices Are Deceptive or 
Unfair

    A representation, omission, or practice is deceptive if it is 
material and likely to mislead a consumer acting reasonably under the 
circumstances.\18\ The most frequent allegations in the Commission's 
enforcement actions involving government and business impersonation 
pertain to defendants tricking consumers to pay money or disclose 
personal information by making, expressly or by implication, statements 
that misrepresent the defendants' identity.\19\ Nearly as frequent are 
allegations of misrepresentations concerning defendants' affiliation 
with, endorsement or approval by, or other association with a 
government or business. The Commission has further found false threats 
of severe consequences and promises of benefits are additional 
deceptive tactics deployed by government and business impersonators. In 
the Commission's experience, such claims regarding identity, 
affiliation, or endorsement are material to consumers making their 
decision to trust impersonators. The numerous government and business 
impersonation complaints consumers submit to the Commission each year, 
as well as comments submitted in connection with this rulemaking 
proceeding, consistently reference these same concerns. Accordingly, 
the specific practices described in the preamble to the proposed rule 
reflect the type of conduct most commonly associated with deceptive and 
unfair practices pertaining to government and business 
impersonation.\20\

C. The Economic Effect of the Rule

    As part of the rulemaking proceeding, the Commission solicited 
comment and data (both qualitative and quantitative) on the economic 
impact of the proposed rule and its costs and benefits.<SUP>21</SUP> In

[[Page 15019]]

issuing the final rule, the Commission has carefully considered the 
comments received and the costs and benefits of each provision, as 
discussed in more detail below in Section VI. The record demonstrates 
the most significant anticipated benefit of the final rule is the 
Commission's ability to obtain monetary relief. This is particularly 
critical because that ability was curtailed by the U.S. Supreme Court's 
decision in AMG Cap. Mgmt., LLC v. FTC, which holds that equitable 
monetary relief, including consumer redress, is not available under 
section 13(b) of the FTC Act.<SUP>22</SUP> Further, obtaining monetary 
relief based on violations of the final rule under section 19(b) of the 
FTC Act will be significantly faster than obtaining such relief under 
section 19(a)(2) without a rule violation.<SUP>23</SUP> By enabling the 
Commission to obtain monetary relief more efficiently, the final rule 
would also reduce the expenditure of Commission resources.<SUP>24</SUP> 
As an additional benefit, the rule enables the Commission to obtain 
civil penalties against violators.<SUP>25</SUP> The final rule also 
provides a benefit to businesses through increased deterrence of 
business impersonators, which reduces businesses' expenditure of 
resources associated with monitoring for and addressing 
impersonation.<SUP>26</SUP> Moreover, as the record and the 
Commission's law enforcement experience demonstrate, the final rule is 
unlikely to impose costs on any honest business, and may increase 
deterrence of impersonation scams, which would benefit consumers 
through a reduction in their total financial losses from these 
schemes.<SUP>27</SUP>

III. Response to Comments

    The Commission received 78 comments in response to the NPRM from a 
diverse group of individuals, industry groups and trade associations, 
consumer organizations, and government agencies.<SUP>28</SUP> The 
Commission received 28 comments in response to the Notice of Hearing, 
including oral presentations from 14 commenters.<SUP>29</SUP> 
Commenters generally supported the proposed rule, recognizing the 
Commission's authority to protect consumers from the increasing number 
of government and business impersonation frauds targeting consumers.
    In the NPRM, the Commission invited comment on any issues or 
concerns the public believes are relevant or appropriate to the 
Commission's consideration of the proposed rule.<SUP>30</SUP> The NPRM 
also posed eight specific questions for the public.<SUP>31</SUP> Some 
of these questions relate to the Paperwork Reduction Act (``PRA'') and 
Regulatory Flexibility Act (``RFA''), and are addressed in Sections V 
and VI, respectively.<SUP>32</SUP> The other questions, along with 
common issues or concerns relevant to the Commission's consideration of 
the proposed rule outside of the specific questions, are addressed in 
this section of the preamble.

A. Finalizing the Proposed Rule as a Final Rule

    In Question 1 of the NPRM, the Commission asked whether it should 
finalize the proposed rule as a final rule, and how, if at all, it 
should change the proposed rule in promulgating the final 
rule.<SUP>33</SUP> The majority of commenters did not express a clear 
view regarding whether the Commission should adopt the proposed rule as 
final. Many of these commenters, however, did share their experience 
regarding the prevalence and harmfulness of various kinds of government 
and business impersonation frauds.<SUP>34</SUP> Some of these 
commenters complained more generally about various non-impersonation 
scams.<SUP>35</SUP> The majority of commenters that addressed Question 
1 of the NPRM were substantially supportive of the proposed rule, but 
stopped short of urging the Commission to finalize the text of the 
proposed rule without modification. These commenters typically 
recommended either broadening or narrowing the scope or text of the 
rule in response to other specific questions asked in the NPRM or 
relevant to the Commission's consideration of the proposed 
rule.<SUP>36</SUP>
    Six commenters explicitly addressed the Commission's question 
regarding finalizing the proposed rule as a final rule, and without 
recommending additional modifications to the text of the proposed rule, 
urged the Commission to do so.<SUP>37</SUP> Some of these commenters 
stated the proposed rule is in the public interest because it would 
allow for civil penalties against government and business 
impersonators, provide redress for victims of impersonation scams, and 
deter future bad acts.<SUP>38</SUP>
    Several government agencies and trade associations explained how 
the proposed rule would benefit them, their members, or the people they 
serve. The United States Patent and Trademark Office (``USPTO'') 
described its experience of agency impersonation, and stated that 
reliance on the FTC's enforcement capabilities through such a rule 
would allow the USPTO to conserve and allocate its resources to 
different enforcement efforts that impact the USPTO and its 
stakeholders.<SUP>39</SUP> Similarly, the Marine Retailers Association 
of the Americas (``MRAA''), a trade association representing marine 
retailers, argued the benefits associated with finalizing the proposed 
rule would reduce the financial burden on businesses and improve trust 
among consumers.<SUP>40</SUP> The United States Copyright Office 
(``USCO'') expressed support for finalizing the proposed rule, arguing 
that doing so would allow the Commission to move more quickly to put a 
stop to impersonation scams.<SUP>41</SUP> The USPTO and the USCO 
explained they do not have law enforcement authority to remedy the 
harms resulting from bad actors impersonating the agencies, and USCO 
argued the proposed rule would foster public trust in the copyright 
system.<SUP>42</SUP> The Cellular Telecommunications and internet 
Association (``CTIA''), a trade association for wireless service 
providers, argued in favor of finalizing the proposed rule because its 
scope is ``targeted and judicious,'' and appropriately focused on the 
bad actors that harm consumers.<SUP>43</SUP>
    Somos, Inc., which manages registry databases for the 
telecommunications industry, stated it ``strongly supports the 
Commission's proposed rules,'' but suggested the Commission explicitly 
clarify that spoofing a telephone number of a business or government 
entity to aid in that impersonation violates the rule.<SUP>44</SUP> The 
Commission is not persuaded that explicitly stating telephone spoofing, 
or any specific type of government or business impersonation, 
constitutes a violation of the rule is necessary.<SUP>45</SUP> 
Moreover, the Telemarketing Sales Rule (``TSR'') already bars 
telemarketers from ``failing to transmit. . .the telephone number and. 
. .the name of the telemarketer to any caller identification service in 
use by a recipient of a telemarketing call.'' <SUP>46</SUP> By 
definition, a spoofed telephone number is not the number of the 
telemarketer, and the Commission can rely on this prohibition to bring 
an enforcement action for violation of the TSR against a telemarketer 
that uses a spoofed number.
    The Commission also received several comments that identified the 
lack of access to accurate information concerning domain name 
registrants (commonly known as ``WHOIS'' data) as a significant 
impediment to combatting the use of domain names to impersonate 
government and businesses.<SUP>47</SUP> These commenters expressed 
support for expanding the text or scope of the final rule to address 
this issue.<SUP>48</SUP> In particular, a few commenters urged the 
Commission to issue a final rule that requires domain name registrars 
to

[[Page 15020]]

collect, verify, maintain, and disclose accurate WHOIS data to the FTC 
and third-party victims on request for such information based on 
credible evidence of impersonation fraud.<SUP>49</SUP> The Coalition 
for Online Accountability (``COA''), a group advocating for online 
transparency and accountability, argued ``[t]here is no justification 
for the redaction of data of legal person registrants or the 
overwhelming denial of reasonable access to personal WHOIS data for 
legitimate third-party interests. . ..'' <SUP>50</SUP> Both the 
Messaging Malware Mobile Anti-Abuse Working Group (``M3AAWG'') and the 
Anti-Phishing Working Group (``APWG'') also suggested the Commission 
encourage Domain Name System (``DNS'') registries and registrars to 
engage in DNS mitigation and frequently impersonated entities to 
participate as ``trusted notifiers'' to address fraudulently registered 
domain names.<SUP>51</SUP>
    The Commission declines to adopt commenters' suggestion that the 
final rule expressly reference in accompanying examples the use of 
domain names in impersonation schemes. Rather, the Commission here 
repeats what it previously stated in the NPRM and earlier in this SBP, 
that the following list of examples of conduct covered by the 
prohibition on the impersonation of government and businesses was 
intended to be illustrative, not exhaustive: (1) calling, messaging, or 
otherwise contacting an individual or entity while posing as a 
government or an officer or agent or affiliate or endorsee thereof, 
including by identifying a government or officer by name or by 
implication; (2) sending physical mail through any carrier using 
addresses, government seals or lookalikes, or other identifying 
insignia of a government or officer thereof; (3) creating a website or 
other electronic service impersonating the name, government seal, or 
identifying insignia of a government or officer thereof or using 
``.gov'' or any lookalike, such as ``govusa.com''; (4) creating or 
spoofing an email address using ``.gov'' or any lookalike; (5) placing 
advertisements that pose as a government or officer thereof against 
search queries for government services; (6) using a government seal on 
a building, letterhead, website, email, vehicle, or other physical or 
digital place; (7) calling, messaging, or otherwise contacting an 
individual or entity while posing as a business or an officer or agent 
or affiliate or endorsee thereof, including by naming a business by 
name or by implication, such as ``card member services'' or ``the car 
dealership''; (8) sending physical mail through any carrier using 
addresses, seals, logos, or other identifying insignia of a business or 
officer thereof; (9) creating a website or other electronic service 
impersonating the name, logo, insignia, or mark of a business or a 
close facsimile or keystroke error, such as ``ntyimes.com,'' 
``rnicrosoft.com,'' ``microsoft.biz,'' or 
``carnegiehall.tixsales.com''; (10) creating or spoofing an email 
address that impersonates a business; (11) placing advertisements that 
pose as a business or officer thereof against search queries for 
business services; and (12) using, without authorization, a business's 
mark on a building, letterhead, website, email, vehicle, or other 
physical or digital place.<SUP>52</SUP> Accordingly, the Commission 
finds the final rule is drafted with sufficient clarity and flexibility 
to address the unauthorized use of internet identifiers, including but 
not limited to domain names.
    Only one commenter suggested in response to Question 1 of the NPRM 
that the proposed rule should not be finalized.<SUP>53</SUP> The 
Americans for Prosperity Foundation (``AFPF''), a 501(c)(3) nonpartisan 
education organization, argued the Commission should ``abandon its 
Section 18 rulemaking ambitions, instead refocusing its efforts on 
case-by-case enforcement actions in federal court in cases involving 
concrete harm to consumers.'' <SUP>54</SUP>
    The Commission disagrees with the AFPF's suggestion that the 
section 18 rulemaking process is too difficult or unwieldy to address 
many of the unfair or deceptive acts or practices prevalent in 
commerce. In 1975, Congress passed the Magnuson-Moss Warranty--Federal 
Trade Commission Improvement Act laying out specific procedures for the 
promulgation of ``Trade Regulation Rules'' to protect consumers in a 
dynamic and changing economic landscape.<SUP>55</SUP> The Commission's 
regulations at 16 CFR part 1, subpart B, respect the underlying 
statutory requirements of section 18, which provide ample transparency 
and opportunity for public participation in the promulgation of Trade 
Regulation Rules. The Commission intends therefore to fulfill its 
mission to protect against unfair or deceptive acts or practices in or 
affecting commerce and to provide consumers and businesses with due 
process, clarity, and transparency while crafting the rules to do so. 
Accordingly, the Commission rightfully responds to Congress's grant of 
authority by initiating this rulemaking.
    The AFPF also expressed various criticisms specific to the language 
of the proposed rule and recommended several suggested revisions 
discussed in greater detail in Sections III.C and III.D below.
    Following review of all comments and careful consideration of the 
relevant law, the final rule issued by the Commission contains some 
minor changes from the proposed rule, as discussed in Section III.

B. Relevant Evidence Regarding Provisions of the Proposed Rule, 
Prevalence, Impact and Alternative Proposals

    In the ANPR, the Commission asked specific questions about the 
prevalence of impersonation fraud, and requested the data source 
commenters relied upon for formulating their answer(s).<SUP>56</SUP> 
The ANPR also asked specific questions regarding how to craft a 
proposed rule to maximize the benefits to consumers and minimize the 
costs to businesses, and what alternatives to regulations the 
Commission should consider in addressing impersonation 
frauds.<SUP>57</SUP> In Question 2 of the NPRM, the Commission posed 
these same or nearly identical specific questions regarding each 
different provision of the proposed rule.<SUP>58</SUP> Six commenters 
specifically addressed these questions.<SUP>59</SUP> Each of these 
commenters described various types of government and business 
impersonation scams common to their own experience or industry in 
support of their view that such frauds are highly 
prevalent.<SUP>60</SUP> For example, the Toy Association noted various 
business impersonation scams experienced by its members, including 
counterfeit or non-compliant toys, falsified documents regarding 
endorsement and affiliation related to counterfeit toys, false 
solicitation and phishing schemes collecting customer information, and 
domain impersonation.<SUP>61</SUP> Similarly, the USPTO and USCO 
described several examples of government impersonation scams involving 
the trademark and copyright registration processes, respectively, and 
included illustrative examples as attachments with their public 
comment.<SUP>62</SUP>
    Other commenters particularly concerned with online business 
impersonation cited data from studies or reports regarding trends in 
these kinds of impersonation frauds, and recent examples of phishing 
attacks against consumers through the impersonation of recognized 
online companies in support of their arguments regarding 
prevalence.<SUP>63</SUP> A small number of

[[Page 15021]]

commenters addressed the impact (including any benefits and costs) on 
consumers, governments, and businesses, discussed in more detail in 
Section VI.
    Only one commenter suggested an alternative proposal for the 
Commission's consideration.<SUP>64</SUP> Specifically, the M3AAWG 
recommended as an alternative to the means and instrumentalities 
provision in proposed Sec.  461.4 that the Commission ``identify best 
practices or safe harbors to incentivize prompt mitigation efforts and 
sound verification techniques'' to address the use of domain names in 
business impersonation schemes.<SUP>65</SUP> M3AAWG argued this 
alternative to regulation would avoid the risk of inadvertently 
imposing ``secondary or intermediary liability against legitimate 
businesses, technologies or services'' exploited by 
impersonators.<SUP>66</SUP>
    Upon review of the comments received in response to Question 2 of 
the NPRM, the Commission concludes such comments support its own 
findings that government and business impersonation schemes are both 
prevalent and harmful. The Commission declines at this time to adopt 
M3AAWG's alternative proposal for Sec.  461.4. As discussed in Section 
III.D, the Commission is continuing to review comments and records 
relevant to the means and instrumentalities provision in proposed Sec.  
461.4 to determine whether additional action or protections are 
warranted and is requesting additional public comment through a SNPRM, 
published elsewhere in this issue of the Federal Register.

C. Clarity of Prohibitions Against Impersonation of Government & 
Businesses

    In Question 5 of the NPRM, the Commission solicited comment 
regarding whether the proposed rule's one-sentence prohibitions against 
impersonation of government in Sec.  461.2 and against impersonation of 
businesses in Sec.  461.3 are clear and unambiguous, and how, if at 
all, they should be improved.<SUP>67</SUP> The Commission received 
several comments that addressed this question directly <SUP>68</SUP> or 
indirectly.<SUP>69</SUP> Two commenters considered the one-sentence 
prohibitions to be clear and unambiguous and/or deferred to the 
Commission's construction, but suggested certain additions or 
modifications.<SUP>70</SUP> For example, the USCO suggested the 
Commission consider whether the definition of ``officer,'' which covers 
representatives of both governments and businesses, should be 
bifurcated into two separate and more specific terms to define 
representatives of governments and businesses, 
respectively.<SUP>71</SUP> No other commenter suggested a revision to 
the definitions in proposed Sec.  461.1. The USPTO suggested the 
Commission broaden the exemplary ``list of matter'' used to impersonate 
a government to specifically reference ``logos.'' <SUP>72</SUP> In 
support of this recommendation, the USPTO noted ``the use of logos'' 
was explicitly identified in the NPRM's examples of unlawful conduct 
that would be covered by the prohibition against business impersonation 
in proposed Sec.  461.3, but not in the NPRM's examples of unlawful 
conduct that would be covered by the prohibition of government 
impersonation in proposed Sec.  461.2. The USPTO further asserted 
government agencies also ``use logos in addition to official seals and 
insignia,'' and provided an illustrative example of impersonators 
misusing the USPTO's logo.<SUP>73</SUP>
    Three commenters indicated the language of proposed Sec. Sec.  
461.2 and 461.3 was vague or provided inadequate guidance, and 
warranted modification.<SUP>74</SUP> Some commenters raised 
constitutional concerns based on the purported overbreadth of the one-
sentence prohibitions.<SUP>75</SUP> These commenters' constitutional 
arguments addressed two primary considerations: (1) whether the 
proposed rule provides due process notice; <SUP>76</SUP> and (2) 
whether it encroaches upon free speech protected under the First 
Amendment.<SUP>77</SUP> The AFPF stated the proposed rule is an ``open-
ended regulation,'' arguing it ``fails to provide constitutionally 
adequate notice of required or prohibited conduct'' and otherwise falls 
short of section 18's specificity requirements.<SUP>78</SUP> Other 
commenters wary of inadvertent intrusions on protected speech asserted 
any final prohibition should exempt innocent behavior such as parody 
<SUP>79</SUP> and non-commercial or otherwise legitimate 
speech.<SUP>80</SUP>
    In his documentary submission in response to the Notice of Informal 
Hearing, William MacLeod echoed concerns he previously expressed in 
response to the NPRM that the language in proposed Sec. Sec.  461.2 and 
461.3 ``depart[s] from the standards of deception that the Commission 
applies under Section 5.'' <SUP>81</SUP> MacLeod noted that: ``[i]ts 
terms do not include `deception' or `fraud' or critical elements of the 
FTC's deception policy statement.'' <SUP>82</SUP> He raised additional 
concerns about ``impersonations and affiliations [that] can be false, 
but also unbelievable.'' <SUP>83</SUP> MacLeod argued that the 
prohibitions, as written, are too broad and would proscribe non-
deceptive acts or practices, such as ``fictional depictions'' in 
television advertisements.<SUP>84</SUP>
    Raising First Amendment concerns, the AFPF similarly asserted that 
the proposed rule's ``falsely pose as'' language, ``read literally,'' 
would impose civil penalties on ``utterly innocuous conduct'' and 
``would appear to make it unlawful for anyone to dress up as an FTC 
Commissioner, politicians, or . . . a Microsoft executive and attend a 
Halloween party.'' <SUP>85</SUP> It also expressed concern that the 
proposed prohibitions did not require ``materiality,'' ``consumer 
harm,'' or ``connection to interstate commerce.'' <SUP>86</SUP> Several 
commenters suggested alternative language to cure what they perceived 
to be the overbreadth of the prohibition provisions. For example, 
M3AAWG recommended that the final rule adopt a definition of 
``impersonation'' that mirrors the definition of ``criminal 
impersonation'' in 18 U.S.C. Chapter 43.<SUP>87</SUP> M3AAWG asserted 
that such a definition would narrow the scope of the rule to cover only 
those bad actors with ``clear intent and specific knowledge'' of 
prohibited acts.
    MacLeod proposed narrowing the focus of the final rule by adopting 
language that specifies particular prohibited practices or the mens rea 
of its intended targets.<SUP>88</SUP> The AFPF agreed with MacLeod and 
suggested that the Commission revise the proposed rule to ``explicitly 
incorporate Section 5's statutory prohibition . . . [and] requirements 
set forth in the Commission's Deception Statement.'' <SUP>89</SUP>
    After analyzing and considering the comments, the Commission is 
persuaded that the language of the final rule should adhere more 
closely to the language of section 5 of the FTC Act to avoid any 
potential confusion about the scope of the rule. The Commission 
believes that these revisions sufficiently address some commenters' 
concerns that the language of the proposed rule put it in conflict with 
Due Process requirements and the First Amendment.
    The Commission emphasizes that it does not intend for the final 
rule to regulate non-commercial speech. To adhere more closely to the 
language of section 5 of the FTC Act and case law, the Commission has 
revised the final regulatory text to incorporate relevant language from 
section 5. Specifically, the Commission has replaced ``unlawful'' with 
``unfair or deceptive act or practice,'' and added ``materially'' and 
``in or affecting commerce'' in Sec. Sec.  461.2 and 461.3. These 
changes make it abundantly clear that the scope of the final regulatory 
text is coterminous with the scope of the FTC's authority under

[[Page 15022]]

the FTC Act, and they clearly specify the misconduct prohibited by the 
final rule. Accordingly, false impersonations or misrepresentations 
that are not material to a commercial transaction, such as 
impersonation in purely artistic or recreational costumery or 
impersonation in connection with political or other non-commercial 
speech, are not covered by the final rule.
    The Commission concludes that it is unnecessary to divide the 
definition of ``officer'' into two separate terms as suggested by the 
USCO. Section 461.1 defines ``officer'' to ``include[ ] executives, 
officials, employees, and agents,'' which the Commission believes 
appropriately describes and covers both government and business 
representatives.
    As previously stated, the NPRM's list of examples of prohibited 
conduct covered by the rule is intended to be illustrative, not 
exhaustive, and therefore, the Commission declines to adopt the USPTO's 
suggestion that it enlarge that exemplary ``list of matter.'' Rather, 
the Commission maintains that not including specific prohibitions in 
the regulatory text provides it with sufficient flexibility to address 
the many types of ``matter'' (including objects, items, logos, 
insignia, etc.) used to impersonate governments and businesses alike, 
which are too numerous to list.
    The Commission declines to adopt a definition of ``impersonation'' 
that reflects a criminal regulatory scheme as proposed by M3AAWG. The 
FTC Act does not include a mens rea requirement, and there is no 
evidence in the record that the imposition of such a requirement is 
warranted. Furthermore, while intent is not required under the rule or 
the FTC Act, in any action seeking civil penalties for violation of the 
rule, the Commission will need to establish ``actual knowledge or 
knowledge fairly implied on the basis of objective circumstances that 
such act is unfair or deceptive and is prohibited by such rule.'' 
<SUP>90</SUP>
    The Commission rejects the recommendation by both MacLeod and AFPF 
to incorporate the FTC Deception Policy Statement into the final rule. 
Nevertheless, as discussed earlier in this Section III.C, informed by 
MacLeod's and AFPF's comments, the Commission has revised the 
regulatory text of Sec. Sec.  461.2 and 461.3 to mirror the language of 
section 5 of the FTC Act more closely. In particular, the reference to 
``unfair or deceptive act or practice,'' and the inclusion of 
materiality and interstate commerce requirements should address 
commenters' concerns that this rule might be read to cover 
impersonation in connection with artistic costumery, parody, or other 
non-commercial speech.<SUP>91</SUP> The Commission further notes that, 
by the terms of these sections, a court must find that the alleged 
defendant made an express or implied misrepresentation regarding 
material information for Sec. Sec.  461.2 and 461.3 to be violated. For 
an express or implied misrepresentation regarding material information 
to be made in violation of the FTC Act and this rule, there must be a 
representation that misleads consumers acting reasonably under the 
circumstances regarding material information. Thus, while the 
Commission rejects the recommendation by both MacLeod and AFPF to 
incorporate the FTC Deception Policy Statement into the final rule, by 
incorporating the changes above, the Commission has ensured that the 
final rule is consistent with the Deception Policy Statement, is 
consistent with other relevant Commission rules, and provides further 
specificity regarding the prohibited acts and practices under section 5 
of the FTC Act.

D. Prohibition Against Providing Means and Instrumentalities

    In Question 6 of the NPRM, the Commission asked whether the final 
rule should contain the prohibition in proposed Sec.  461.4 against 
providing the means and instrumentalities for violations against 
government or business impersonation. The Commission received more than 
20 comments that expressly addressed this question.<SUP>92</SUP> Many 
of the sentiments reflected in these comments were also echoed by 
several commenters that presented oral statements in response to the 
Notice of Informal Hearing.<SUP>93</SUP>A few commenters arguing for 
the importance of holding intermediaries accountable for enabling or 
promoting impersonation schemes encouraged the Commission to finalize 
the text of the proposed provision without modification.<SUP>94</SUP> 
These commenters specifically argued that finalizing the proposed Sec.  
461.4 could help to combat impersonation schemes perpetrated by 
foreign-based scammers--beyond U.S. court jurisdiction--that obtain 
services from U.S.-based instrumentalities, such as payment processors 
and internet service providers.<SUP>95</SUP>
    Addressing means and instrumentality liability, both the AFPF and 
MacLeod reiterated their concerns referenced in Section III.C, 
regarding section 18's specificity requirements, due process notice, 
free speech, and conformity to the FTC's Deception Policy 
Statement.<SUP>96</SUP> Most commenters who addressed Question 6 
expressed support for means and instrumentalities liability, but with 
some concern or suggested modifications. Some supportive commenters 
cautioned that the proposed means and instrumentalities provision could 
be read too broadly.<SUP>97</SUP> Others expressed the concern that 
without a specific scienter or knowledge requirement, the proposed rule 
provision runs the risk of imposing strict liability against innocent 
and unwitting third-party providers of services or 
products.<SUP>98</SUP> Accordingly, several commenters urged the 
Commission to clarify the scope of means and instrumentalities 
liability or explicitly include a specific knowledge requirement in the 
final rule provision.<SUP>99</SUP>
    For example, the Consumer Technology Association (``CTA''), a trade 
association representing the U.S. consumer technology industry, stated 
that the Commission's explanation and examples of the ``means and 
instrumentalities'' provision in the NPRM seem to limit its 
applicability, but such limitation ``is not squarely reflected in the 
text of the proposed rule.'' <SUP>100</SUP> The CTA therefore urged the 
FTC to clarify that ``means and instrumentalities'' liability applies 
only ``to entities that have knowledge or consciously avoid knowing 
that they are making representations being used to commit impersonation 
fraud.'' USTelecom, a trade association representing the broadband 
technology industry, argued that a discrepancy exists between the case 
law, the NPRM's discussion of means and instrumentality liability, and 
the proposed rule provision. It urged the Commission to ``adjust the 
proposed language in Sec.  461.4 to codify the requirement that the 
person has knowledge or reason to expect it is providing the means and 
instrumentalities . . .'' (emphasis in original).<SUP>101</SUP> 
Similarly, the American Bar Association Section of Intellectual 
Property Law suggested that the Commission ``explicitly include [in 
Sec.  461.4] the language referenced in the [NPRM] from Shell Oil Co., 
128 F.T.C. 749 (1999)--acting with `knowledge or reason to expect that 
consumers may possibly be deceived as a result.' '' <SUP>102</SUP>
    Other commenters argued that inclusion of a scienter requirement is 
a necessary but not sufficient modification of the proposed language to 
impose means and instrumentalities liability. For example, the internet 
& Television Association (``NCTA''), a trade association for the United 
States cable television industry, argued that such ``liability requires 
both providing deceptive means and instrumentalities, e.g., providing 
false or misleading

[[Page 15023]]

claims or counterfeit items, and actual knowledge that the deceptive 
representations or goods will be used to commit impersonation 
violations'' (emphasis in original).<SUP>103</SUP> Likewise, M3AAWG 
advocated that, in addition to a ``knowledge or reason-to-know test,'' 
primary liability under a revised Sec.  461.4 should also require that 
the provision of such means and instrumentalities be done willfully or 
in bad faith, and with clear intent and specific 
knowledge.<SUP>104</SUP>
    A few commenters urged the Commission to adopt a final rule that 
explicitly recognizes specific or defined ``means and instrumentality'' 
violations perpetrated in connection with impersonation frauds, such as 
the use of legal process documents <SUP>105</SUP> or manipulated media 
technologies (i.e., deepfakes) <SUP>106</SUP> or failure to disclose 
WHOIS data.<SUP>107</SUP>
    Based upon the comments received on the proposed provision 
regarding means and instrumentalities, the Commission has decided that 
this specific provision warrants further analysis and consideration; 
thus, the Commission has decided not to finalize proposed Sec.  461.4. 
The Commission is not aware of any other rule, whether issued pursuant 
to section 18 or APA rulemaking authority, that identifies a means and 
instrumentalities violation. The Commission notes that it has used 
means and instrumentalities allegations as a type of deception to 
establish primary liability in the absence of privity between the 
defendant and the deceived persons, albeit rarely, in connection with 
matters that involve impersonation.<SUP>108</SUP> Pending further 
analysis and consideration, the Commission declines to adopt proposed 
Sec.  461.4 at this time. The Commission is still considering the 
provision regarding means and instrumentalities, as well as issues 
related to the impersonation of individuals or entities other than 
governments and business in interstate commerce and is requesting 
public comment through a Supplemental Notice of Proposed Rulemaking 
(``SNPRM''), published elsewhere in this issue of the Federal Register.

E. Inclusion of Prohibition Against Impersonating Nonprofits

    In response to the ANPR, the Commission received a number of 
comments that urged the Commission to include ``nonprofit'' entities in 
the proposed rule's definition of businesses that can be 
impersonated.<SUP>109</SUP> The Commission agreed with these comments, 
and consequently, defined a ``business'' that may be impersonated to 
include nonprofits in Sec.  461.1 of the proposed rule, notwithstanding 
the fact that the Commission is authorized to sue a corporation only 
when the corporation is ``organized to carry on business for its own 
profit or that of its members.'' <SUP>110</SUP> As the Commission 
explained in the NPRM, the reason for doing so is because for profit 
businesses may impersonate nonprofit business.<SUP>111</SUP> In 
Question 7 of the NPRM, the Commission solicited comment regarding 
whether any final rule should keep the prohibition against 
impersonating nonprofit organizations.<SUP>112</SUP> The Commission 
received more than a dozen comments that specifically addressed this 
question, and each of them expressed support for a final rule keeping 
the prohibition against impersonating nonprofits.<SUP>113</SUP> None of 
the comments responding to the NPRM or Notice of Hearing opposed doing 
so. The vast majority of commenters who addressed this question were 
themselves nonprofit organizations operating as trade associations, and 
referenced their own experience with impersonation frauds in support of 
a final rule keeping the prohibition against impersonating 
nonprofits.<SUP>114</SUP> Several commenters expressed the view that 
nonprofits are often the subject of impersonation scams in the same way 
as for profit businesses and government agencies.<SUP>115</SUP> Other 
commenters asserted that impersonation of nonprofits could be uniquely 
harmful because bad actors ``prey[ ] on the goodwill of individuals 
attempting to make donations, and misappropriate[ ] those donations to 
corrupt private actions.'' <SUP>116</SUP> Some commenters noted that 
nonprofits are particularly susceptible to being impersonated in scams 
involving affiliation or endorsement claims because nonprofits often 
offer awards or seals of approval.<SUP>117</SUP>
    Finally, two commenters cited trademark law in support of keeping 
nonprofits in the definition of business and a final rule that includes 
the prohibition against impersonating nonprofits. Specifically, both 
INTA and the Toy Association stated that trademark law has ``long 
recognized that the misuse of names of non-profit organizations can 
lead to harmful consumer confusion.'' <SUP>118</SUP> In INTA's and the 
Toy Association's view, the same applies with respect to impersonation 
schemes; thus, the final rule should also make no distinction between 
for profit and nonprofit businesses.
    Based upon the record, including public comments in response to 
Question 7 of the NPRM, the Commission has determined that the final 
rule will retain the definition of ``business'' in Sec.  461.1 that 
includes nonprofits and the prohibition against impersonating nonprofit 
organizations in Sec.  461.3.

F. Inclusion of Individuals or Entities Other Than Government and 
Business Impersonators

    In the NPRM, the Commission asked whether the proposed rule should 
be expanded to address the impersonation of individuals or entities 
other than governments and business in interstate 
commerce.<SUP>119</SUP> The NPRM identified romance and grandparent 
impersonation scams as illustrative, but non-exhaustive, examples of 
other types of impersonation fraud, and solicited further comment 
regarding their prevalence and impact, and alternative proposals to 
regulation. Six commenters specifically addressed these questions, and 
each of them stated that the Commission should expand the reach of the 
proposed rule to extend beyond government and business 
impersonators.<SUP>120</SUP> Some commenters asserted that fraudsters 
often impersonate individuals in similar ways they impersonate 
government and businesses.<SUP>121</SUP> In support of expanding the 
rule, several commenters argued that romance and grandparent 
impersonation scams were harmful and prevalent, citing to data from the 
FTC and other sources showing a steady increase in the number of 
consumer reports and median individual losses for such 
scams.<SUP>122</SUP> A comment submitted by a group of students at 
Rutgers Law School asserted that older consumers are susceptible to 
``interpersonal confidence fraud and romance scams'' and provided 
relevant data demonstrating that older consumers may be more likely to 
fall victim to these kinds of impersonation than to government 
impersonation.<SUP>123</SUP> Several commenters also stated that while 
the number of reports of these two types of impersonation scams are not 
as high as government and business impersonation, they are likely 
underreported, and that median individual losses are often 
higher.<SUP>124</SUP> The AARP stated that, ``[o]f all fraud activity, 
romance scams and scams impersonating a family member in trouble are 
the most insidious, given the emotional devastation that combines with 
often significant financial losses.'' <SUP>125</SUP> A joint comment 
submitted by several consumer and privacy advocacy organizations argued 
that such evidence ``should be sufficient justification'' for the 
Commission to ``add a subsection to proposed Section 461 to cover 
`Impersonation of Individuals.' '' <SUP>126</SUP>

[[Page 15024]]

    A few commenters discussed the prevalence and harmfulness of other 
kinds of impersonation scams as support for expanding the rule beyond 
government and businesses to include individuals. For example, the NCTA 
stated that its member companies had observed an increase in 
sophisticated residential IP address scams that impersonate online 
subscribers for illegal purposes such as piracy and 
fraud.<SUP>127</SUP> NCTA encouraged the Commission to consider a new 
rule to prohibit impersonation of individuals through ``unauthorized 
use of an individual's online credentials, accounts, IP addresses, and 
digital networks.'' <SUP>128</SUP> The Recording Industry Association 
of America (``RIAA'') described impersonation scams involving offers of 
NFTs and mobile apps suggesting affiliation with sound recording 
artists and phishing scams where third parties claimed to be a music 
artist's manager or producer.<SUP>129</SUP> RIAA recommended that the 
Commission expand the rule to include the following: ``[I]t [is] 
unlawful to falsely pose as or to misrepresent, directly or by 
implication, affiliation with, including endorsement or sponsorship by, 
an individual, for financial gain.'' <SUP>130</SUP>
    The Rutgers Law Students noted the prevalence of social media, and 
profiles of celebrities and influencers in current modes of online 
communication, arguing that it would be a ``grave oversight'' to omit 
persons with such notable identities from a rule prohibiting 
impersonation.<SUP>131</SUP> The students also argued that individuals 
are more likely than government agencies or businesses to suffer direct 
harm to their identities from impersonation scams and less likely to be 
able to repair the reputational injuries.<SUP>132</SUP> Accordingly, 
they proposed that the Commission add another section to the rule with 
language prohibiting the impersonation of ``any person'' that parallels 
the language in Sec. Sec.  461.2 and 461.3 prohibiting the 
impersonation of government and businesses, respectively.<SUP>133</SUP> 
The students further stated that this additional provision ``closes a 
loophole'' that proposed Sec. Sec.  461.2 and 461.3 leave open 
regarding the impersonation of former government and business 
officials.<SUP>134</SUP> Finally, the students concluded that adding 
such a narrowly drafted provision would not burden honest businesses or 
individuals, and would benefit consumers because the median individual 
losses for other kinds of impersonation frauds are often greater than 
for government and business impersonation.<SUP>135</SUP> Both the 
students and the NCTA agreed that expanding the proposed rule to 
prohibit impersonation of individuals would not impact recreational or 
comedic impersonations of individuals in television or 
film.<SUP>136</SUP>
    Upon consideration of the comments received in response to Question 
8 of the NPRM and all relevant records and data, the Commission is 
seeking additional public comment about potentially expanding part 461 
to cover impersonation of individuals or entities other than 
governments and businesses in interstate commerce in a SNPRM published 
elsewhere in this issue of the Federal Register.<SUP>137</SUP>

G. Requiring Domain Name Registrars To Collect, Verify, Maintain, and 
Disclose Accurate WHOIS Data

    The Commission received several comments that identified the lack 
of access to accurate information concerning domain name registrants 
(commonly known as ``WHOIS'' data) as a significant impediment to 
combatting the use of domain names to impersonate government and 
businesses.<SUP>138</SUP> These commenters expressed support for 
expanding the text or scope of the final rule to protect consumers from 
this increasingly prevalent impersonation scheme.<SUP>139</SUP> In 
particular, a few commenters urged the Commission to issue a final rule 
that requires domain name registrars to collect, verify, maintain, and 
disclose accurate WHOIS data to the FTC and third-party victims on 
request for such information based on credible evidence of 
impersonation fraud.<SUP>140</SUP> As previously noted, the COA argued 
that the redaction or denial of reasonable access to WHOIS data is 
unjustified.<SUP>141</SUP> Both M3AAWG and APWG also suggested that the 
Commission encourage DNS registries or registrars to engage in DNS 
mitigation and frequently impersonated entities to participate as 
``trusted notifiers'' to address fraudulently registered domain 
names.<SUP>142</SUP>
    Because the deceptive use of internet domain names is already 
covered under the rule, the Commission declines to adopt commenters' 
suggestion that the final rule expressly reference in the text or 
accompanying examples the use of domain names in impersonation schemes. 
As previously noted in Section III.A, the NPRM's preamble contained a 
list of examples of conduct covered by the prohibition on the 
impersonation of government and businesses that was intended to be 
illustrative, not exhaustive.<SUP>143</SUP> Such a comprehensive list 
would be both impossible and would not provide the trade regulation 
rule with the flexibility to accommodate changes in the marketplace and 
scammers' behavior. The Commission finds therefore that the final rule 
is drafted with sufficient clarity and flexibility to address the 
unauthorized use of internet identifiers, including but not limited to, 
domain names. Furthermore, the Commission declines to issue a final 
rule that imposes affirmative requirements upon domain name registrars 
which is beyond the purview of this rulemaking and doing so arguably 
would place an impracticable burden upon consumers to know about and 
verify the trustworthiness of such WHOIS data.

H. Comments Regarding Limitation of Remedies

    A small number of commenters urged the Commission to clarify that 
any final rule regarding impersonation would not limit any rights and 
remedies already available to businesses and consumers that have been 
the subject of impersonation.<SUP>144</SUP> For example, 
notwithstanding its support of the Commission's rulemaking to address 
impersonation, the American Bar Association Section of Intellectual 
Property Law asserted that many government impersonation scams should 
be referred to the Department of Justice for criminal prosecution, and 
therefore, cautioned that any regulatory approach ``not dilute the 
impetus for a criminal law solution.'' <SUP>145</SUP> Other commenters 
suggested that the Commission clarify that any final rule is not 
intended to limit any existing private right of action or civil 
remedies.<SUP>146</SUP> Specifically, the Toy Association and INTA both 
advocated that any final rule on impersonation not be interpreted as 
limiting the rights and remedies available to trademark owners under 
the Lanham Act and the Anti-Cybersquatting Consumer Protection Act. 
INTA further proposed that the Commission issue a clarification that 
any final rule is intended only to complement--not expand or contract--
the legal protections available to private parties under the entire 
body of federal or state trademark and unfair competition 
law.<SUP>147</SUP>
    By issuing the final rule regarding government and business 
impersonation, the Commission does not preempt or intend to preempt 
action in the same area, which is not inconsistent with this final 
rule, by any federal, state, municipal, or other local government. This 
final rule does not annul or diminish any rights or remedies provided 
to consumers or businesses by any federal, state law, municipal 
ordinance, or other local regulation, insofar as those rights or

[[Page 15025]]

remedies are equal to or greater than those provided by this final 
rule.

IV. Final Rule

    For the reasons described above, the Commission has determined to 
adopt the provisions of proposed Sec.  461.1 as initially proposed, and 
the provisions of Sec. Sec.  461.2 and 461.3 with clarifying 
modifications. The Commission declines to finalize proposed Sec.  461.4 
at this time.
    Specifically, the Commission concludes that the proposed definition 
of ``officer'' is sufficient to cover both government and business 
representatives, and therefore, need not be divided into two separate 
terms. Further, the final rule includes a definition of 
``materially''--which has been used in other section 18 rules--to avoid 
potential confusion or potential perceived conflict with non-commercial 
speech. For these same reasons, the final rule replaces ``unlawful'' 
with ``unfair or deceptive act or practice'' and adds ``materially'' 
and ``in or affecting commerce'' in Sec. Sec.  461.2 and 461.3. Such 
revised language further clarifies that the rule conforms to the well-
established standards for deception and unfairness under the FTC Act. 
Finally, the Commission declines to finalize the proposed Sec.  461.4 
provision regarding means and instrumentalities at this time because 
further analysis and consideration is warranted based on the record, 
including comments. The Commission is requesting additional public 
comment on this provision, and on issues related to the impersonation 
of individuals or entities other than governments and business in 
interstate commerce, through a SNPRM, published elsewhere in this issue 
of the Federal Register.

V. Paperwork Reduction Act

    The Paperwork Reduction Act (``PRA''), 44 U.S.C. 3501 et seq., 
requires federal agencies to seek and obtain Office of Management and 
Budget (``OMB'') approval before undertaking a collection of 
information directed to ten or more persons. In Question 3 of the NPRM, 
the Commission asked commenters whether the proposed rule contained a 
collection of information.<SUP>148</SUP> No comments responding to the 
NPRM or Notice of Hearing addressed this question. While the Commission 
has revised the rule based on the comments it received, it has not 
added any new requirements that would collect information from the 
public. Accordingly, the Commission has determined that there are no 
new requirements for information collection associated with this final 
rule.

VI. Regulatory Analysis and Regulatory Flexibility Act Requirements

    Under section 22 of the FTC Act, the Commission, when it 
promulgates a final rule, must issue a ``final regulatory analysis.'' 
<SUP>149</SUP> The required contents of this final regulatory analysis 
are: (1) ``a concise statement of the need for, and the objectives of, 
the final rule''; (2) ``a description of any alternatives to the final 
rule which were considered by the Commission''; (3) ``an analysis of 
the projected benefits and any adverse economic effects and any other 
effects of the final rule''; (4) ``an explanation of the reasons for 
the determination of the Commission that the final rule will attain its 
objectives in a manner consistent with applicable law and the reasons 
the particular alternative was chosen''; and (5) ``a summary of any 
significant issues raised by the comments submitted during the public 
comment period in response to the preliminary regulatory analysis, and 
a summary of the assessment by the Commission of such issues.'' 
<SUP>150</SUP> Additionally, the Regulatory Flexibility Act (``RFA''), 
5 U.S.C. 601-612, requires an agency to provide a Final Regulatory 
Flexibility Analysis (``FRFA'') with the final rule, if any, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities.<SUP>151</SUP>
    The NPRM included an Initial Regulatory Flexibility Analysis 
(``IRFA'') even though the Commission did not expect that the proposed 
rule would have a significant economic impact on a substantial number 
of small entities.<SUP>152</SUP> The Commission invited public comment 
on the proposed rule's effect on small entities to ensure that no 
significant impact would be overlooked.<SUP>153</SUP>
    The FTC does not expect that the final rule will have a significant 
economic impact on a substantial number of small entities, and this SBP 
serves as notice to the Small Business Administration of the agency's 
certification of no significant impact. The final rule imposes no 
disclosure or recordkeeping requirements. As such, both the burdens 
imposed on small entities and the economic impact of the final rule are 
likely to be minimal, if any. Furthermore, as noted in the IRFA, the 
rule does not change the law regarding the legality of government and 
business impersonation, which are already prohibited by section 5 of 
the FTC Act.<SUP>154</SUP> Although the Commission certifies the final 
rule would not, if promulgated, have a significant impact on a 
substantial number of small entities, the Commission has determined, 
nonetheless, it is appropriate to conduct the following 
FRFA,<SUP>155</SUP> which incorporates the Commission's initial 
findings, as set forth in the NPRM,<SUP>156</SUP> addresses the 
required contents of the final regulatory analysis, and describes the 
steps the Commission has taken in the final rule to minimize its impact 
on small entities.

A. Concise Statement of the Need for, and Objectives of, the Final Rule

    Based upon the record, including public comments, the Commission is 
implementing the rule to expand the remedies available to it to combat 
government and business impersonation deception. Throughout this 
rulemaking proceeding, the Commission has described how the U.S. 
Supreme Court decision in AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 
1352 (2021) overturned how section 13(b) of the FTC Act had 
historically been understood for 40 years to provide equitable monetary 
relief, and made it significantly more difficult for the Commission to 
obtain money for injured consumers.<SUP>157</SUP> The objective of this 
final rule is to make available a shorter, faster and more efficient 
path for recovery of money for injured consumers directly through 
federal court action in Commission enforcement actions involving 
impersonation of government or business.<SUP>158</SUP> Further, the 
rule would deter illegal impersonation and allow for the imposition of 
civil penalties, where appropriate.<SUP>159</SUP>

B. Discussion of Significant Alternatives the Commission Considered 
That Would Accomplish the Stated Objectives of the Final Rule and That 
Would Minimize Any Significant Economic Impact of the Final Rule on 
Small Entities

    Through the NPRM, the Commission requested public comment on what 
impact (including costs) will be incurred by existing and future 
businesses to comply with the proposed rule, and whether the Commission 
should consider alternative proposals to the proposed 
rule.<SUP>160</SUP> This information was requested by the Commission to 
minimize the final rule's burden on all businesses, including small 
entities. As explained throughout this SBP, the Commission has 
considered the comments and alternatives proposed by commenters and 
finds the final rule will not create a significant economic impact on 
small entities.<SUP>161</SUP> Indeed, the type of deception that will 
be unlawful under the final rule is already unlawful under the FTC Act, 
but the final rule would allow the Commission to obtain monetary relief 
more efficiently than it could solely under section 19(a)(2) of

[[Page 15026]]

the FTC Act (i.e., without a rule violation). Accordingly, the 
Commission does not propose any specific small entity exemption or 
other significant alternatives.

C. Summary of Significant Issues Raised by the Public Comments in 
Response to the Preliminary Regulatory Analysis and IRFA

    None of the comments received during the public comment period 
raised any significant issues in response to the preliminary regulatory 
analysis required pursuant to section 22 of the FTC Act.<SUP>162</SUP> 
In the IRFA, however, the Commission sought comment regarding the 
impact of the proposed rule and any alternatives the Commission should 
consider, with a specific focus on the effect of the rule on small 
entities. In the NPRM, the Commission reiterated this request for 
comment in Question 4, asking whether the proposed rule, if 
promulgated, would have a significant impact on a substantial number of 
small entities. Two commenters that specifically addressed the impact 
of the proposed rule on small entities stated it would have a 
beneficial economic impact by reducing the time and financial burden 
small entities expend on fighting impersonation frauds.<SUP>163</SUP> 
One commenter urged the Commission not to implement a final rule that 
would require third-party providers of government filing services to 
include extensive disclosures in their marketing materials, arguing 
such disclosure requirements could lead to small businesses declining 
the offered services and falling out of compliance with government 
filing obligations.<SUP>164</SUP> This commenter, however, did not 
identify any proposed disclosure requirements that were the subject of 
his concern, nor does the Commission impose any such disclosure 
requirements in connection with the final rule. None of the comments 
responding to the NPRM or Notice of Hearing disputed the analysis in 
the IRFA. Finally, the Small Business Administration did not submit 
comments.
    After reviewing the public comments on the proposed rule, as 
discussed throughout this SBP, the Commission concludes the final rule 
will not unduly burden small entities. The Commission's explanation in 
the IRFA regarding the proposed rule is true of the final rule--it only 
constitutes a significant economic impact for small entities violating 
existing law, which are not entitled to procedural protections when 
agencies consider rulemaking.<SUP>165</SUP>

D. Analysis of Projected Benefits and Adverse Effects of the Final Rule

    In the NPRM, the Commission invited public comment and data on any 
benefits and costs of proceeding with the rulemaking to inform a final 
regulatory analysis.<SUP>166</SUP> In issuing the final rule, the 
Commission has carefully considered the comments received and the costs 
and benefits of each provision. As discussed throughout this SBP, the 
Commission believes, and the record demonstrates, the final rule would 
provide several benefits to consumers, businesses, and competition, and 
help preserve agency resources, without imposing any significant 
adverse effects.
    The Commission's explanation in the IRFA regarding the proposed 
rule is true of the final rule--it is difficult to quantify with 
precision what all its benefits may be, but it is helpful to begin with 
the scope of the problem the final rule would address, and then 
describe the benefits qualitatively. As discussed in the NPRM, reported 
consumer losses due to government impersonation topped $445 million in 
2021; <SUP>167</SUP> and as anticipated, remained large, and even 
increased substantially, with total consumer losses of $513 million 
reported in 2022 and more than $483 million for the first ten months of 
2023.<SUP>168</SUP> Similarly, the annual consumer loss reported due to 
business impersonation has increased from $453 million in 2021 to $670 
million in 2022.<SUP>169</SUP> Accordingly, the most significant 
anticipated benefit of the final rule is that it will allow the 
Commission to provide monetary relief to victims of rule violations and 
seek civil penalties against violators.<SUP>170</SUP> Furthermore, the 
final rule should reduce economic harm resulting from impersonation 
because its potential deterrent effects make it less likely 
impersonators get to keep their ill-gotten gains and more likely they 
must pay civil penalties.
    The final rule also would provide the benefit of a shorter path to 
obtaining consumer redress because the Commission could directly pursue 
in federal court section 19 remedies in government and business 
impersonation enforcement actions that do not implicate an existing 
rule. The availability of more immediate consumer redress in federal 
court under section 19 would allow the Commission to reduce the expense 
of litigating and minimize the litigation fora and scope. The 
Commission could then apply the savings of these enforcement resources 
to investigating and, where the facts warrant, bringing enforcement 
actions in additional impersonation matters.
    The final rule also would benefit businesses whose brands are 
harmed by impersonators.<SUP>171</SUP> As several commenters have 
mentioned, a final rule that would allow the Commission to bring 
enforcement actions more efficiently against impersonators would save 
businesses the time and other resources dedicated to monitoring and 
combatting these kinds of deception.
    The record is devoid of any evidence suggesting the final rule 
would cause harm or adversely impact economic conditions.

E. Description and an Estimate of the Number of Small Entities to Which 
the Final Rule Will Apply, or Explanation Why No Estimate Is Available

    Small entities engaging in the impersonation of government and 
business potentially may be found across a variety of industries and 
economic sectors, but industry and sector data do not identify entities 
by such conduct. Accordingly, it is not possible to estimate the number 
of small entities to which the final rule will apply. However, because 
the Commission finds the final rule will not impose any recordkeeping 
or other compliance costs on covered entities, the Commission concludes 
the final rule will not have a significant impact on a substantial 
number of small entities, notwithstanding the lack of data on how many 
small entities will be covered by the final rule.

F. Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Final Rule, Including an Estimate of the 
Classes of Small Entities That Will Be Subject to the Requirements of 
the Final Rule and the Type of Professional Skills That Will Be 
Necessary To Implement the Final Rule

    The final rule does not have any reporting or recordkeeping 
requirements.<SUP>172</SUP> As explained previously, the final rule 
would apply to no small entities other than small entities violating 
existing law, and therefore, no classes of small entities will be 
subject to the requirements of the final rule. Finally, no professional 
skills are necessary for compliance with the final rule other than 
honesty and integrity.

G. An Explanation of the Reasons for the Determination of the 
Commission That the Final Rule Will Attain Its Objectives in a Manner 
Consistent With Applicable Law and the Reasons the Particular 
Alternative Was Chosen

    The Commission's primary objective in commencing this rulemaking 
was to

[[Page 15027]]

expand the remedies available to it in combatting two prevalent 
categories of impersonation scams most frequently reported by 
consumers--government impersonators and business impersonators. As 
explained throughout this SBP, based upon the record, including public 
comments, the Commission finds the final rule will attain this 
objective in a manner consistent with applicable law.
    The final rule is straightforward and defines with specificity acts 
or practices that are unfair or deceptive in or affecting commerce 
within the meaning of section 5(a)(1) of the FTC Act, 15 U.S.C. 
45(a)(1). It also avoids novelty by borrowing from existing rules and 
statutory definitions.<SUP>173</SUP> At the same time, the final rule 
is drafted with sufficient flexibility to address the various types of 
conduct covered by the prohibition on the impersonation of government 
and businesses. Furthermore, this rulemaking has provided ample 
transparency and opportunity for public participation in accordance 
with the underlying statutory requirements of section 18 of the FTC 
Act, 15 U.S.C. 57a, the Administrative Procedure Act, and Part 1, 
subpart B of the Commission's Rules of Practice.<SUP>174</SUP>

VII. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs has designated this 
rule as not a ``major rule,'' as defined by 5 U.S.C. 804(2).

Endnotes

    \1\ Fed. Trade Comm'n, Advance Notice of Proposed Rulemaking: 
Trade Regulation Rule on Impersonation of Government and Businesses, 
86 FR 72901 (Dec. 23, 2021), https://www.federalregister.gov/documents/2021/12/23/2021-27731/trade-regulation-rule-on-impersonation-of-government-and-businesses.
    \2\ See id. at 72904.
    \3\ Those included, among others, numerous reports of government 
impersonation scams reported to federal agencies as reflected in the 
following public announcements. On March 7, 2022, the Federal Bureau 
of Investigation issued a Public Service Announcement ``warning the 
public of ongoing widespread fraud schemes in which scammers 
impersonate law enforcement or government officials in attempts to 
extort money or steal personally identifiable information.'' 
Similarly, on May 20, 2022, multiple federal law enforcement 
agencies issued a scam alert spearheaded by the Social Security 
Administration's Office of the Inspector General warning the public 
of government impersonation scams involving the reproduction of 
federal law enforcement credentials and badges. On June 3, 2022, the 
Commission issued a press release noting that in some impersonation 
scams, fraudsters have instructed consumers to convert cash into 
cryptocurrency under false threats of government investigations or 
fraud. See Fed. Trade Comm'n, Notice of Proposed Rulemaking: Trade 
Regulation Rule on Impersonation of Government and Businesses, 87 FR 
62741, 62742 (Oct. 17, 2022), https://www.federalregister.gov/documents/2022/10/17/2022-21289/trade-regulation-rule-onimpersonation-of-government-and-businesses.
    \4\ See id. at 62741-51.
    \5\ See id. at 62741-42.
    \6\ Id. at 62750.
    \7\ See Fed. Trade Comm'n, Trade Regulation Rule on 
Impersonation of Government and Businesses, https://www.regulations.gov/docket/FTC-2022-0064/comments.
    \8\ Cindy L. Brown and Raye Mitchell, Cmt. on NPRM at 9 (Dec. 
19, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0077 
(``Brown Cmt.''); William MacLeod, Cmt. on NPRM at 2 (Dec. 16, 
2022), https://www.regulations.gov/comment/FTC-2022-0064-0078 
(``MacLeod Cmt.'').
    \9\ Fed. Trade Comm'n, Initial Notice of Informal Hearing: Trade 
Regulation Rule on Impersonation of Government and Businesses, 88 FR 
19024 (Mar. 30, 2023), https://www.federalregister.gov/documents/2023/03/30/2023-06537/trade-regulation-rule-on-impersonation-of-government-and-businesses. This Initial Notice of Informal Hearing 
also served as the Final Notice of Informal Hearing. The Commission 
determined William MacLeod's comment in response to the NPRM 
represented an ``adequate request'' for such an informal hearing. 
The comment from Cindy Brown explicitly requesting to make a 
presentation at an informal hearing also represented an ``adequate 
request'' triggering the Commission's obligation to hold an informal 
hearing but was inadvertently omitted from inclusion in the Initial 
Notice of Informal Hearing.
    \10\ Because this informal hearing was the first held in several 
decades, the Commission allowed interested parties to request the 
opportunity to make an oral comment in response to the Notice of 
Informal Hearing as well as the NPRM. However, the Commission noted 
that in the future it may limit oral statements to those who 
requested to make an oral statement in response to the NPRM, as 
provided for in the Rules of Practice. Id. at 19025 n.24.
    \11\ Although Cindy Brown did not submit a request to make an 
oral statement in response to the Notice of Hearing, she was 
permitted to make an oral statement at the hearing based upon her 
prior comment in response to the NPRM in which she explicitly stated 
her interest ``in making a presentation at an informal hearing.''
    \12\ The Notice of Informal Public Hearing comments addressing 
specific provisions of the rule or questions in the NPRM soliciting 
public comment are discussed in Section III within the substantive 
discussions on the relevant provisions.
    \13\ 5 U.S.C. 551 et seq.; 16 CFR 1.7-1.20.
    \14\ Rules of Practice, 16 CFR 1.14(a)(1)(i)-(iii). In addition, 
in accordance with 16 CFR 1.14(a)(2), the regulatory analysis is 
provided in Section VI of this SBP.
    \15\ ANPR, 86 FR at 72901; see also Fed. Trade Comm'n, Explore 
Government Imposter Scams, TABLEAU PUBLIC, https://public.tableau.com/app/profile/federal.trade.commission/viz/GovernmentImposter/Infographic.
    \16\ NPRM, 87 FR at 62742.
    \17\ Id. at 62742-46.
    \18\ In re Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (1984); 
see also In re POM Wonderful LLC, No. 9344, 2013 WL 268926, at *18 
(Jan. 16, 2013).
    \19\ ANPR, 86 FR at 72901.
    \20\ NPRM, 87 FR at 62746-47.
    \21\ ANPR, 86 FR at 72903-04; see also NPRM, 87 FR at 62748-49.
    \22\ See AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 1352 
(2021).
    \23\ See 15 U.S.C. 57b(a) and (b); see also NPRM, 87 FR at 62746 
(discussing AMG Cap. Mgmt.).
    \24\ The Commission can recover money for consumers directly 
through a federal court action or obtain civil penalties directly 
from a federal court when the Rule has been violated. Without the 
Rule, the path to monetary relief is longer, and requires the 
Commission to first issue a final cease-and-desist order--which 
might not become final until after the resolution of any resulting 
appeal. Then, to recover money for consumers, the Commission must 
prove that the violator engaged in fraudulent or dishonest conduct 
in a second action in federal court. See 15 U.S.C. 57b(a) and (b).
    \25\ See section 5(m)(1)(A) of the FTC Act, 15 U.S.C. 
45(m)(1)(A) (providing that violators of a trade regulation rule 
``with actual knowledge or knowledge fairly implied on the basis of 
objective circumstances that such act is unfair or deceptive and is 
prohibited by such rule'' are liable for civil penalties for each 
violation). In addition, any entity or person who violates such a 
rule (irrespective of the state of knowledge) is liable for injury 
caused to consumers by the rule violation. The Commission may pursue 
such recovery in a suit for consumer redress under section 19 of the 
FTC Act, 15 U.S.C. 57b.
    \26\ NPRM, 87 FR at 62749.
    \27\ Id.
    \28\ https://www.regulations.gov/document/FTC-2021-0077-0001/comment.
    \29\ https://www.regulations.gov/docket/FTC-2023-0030/comments.
    \30\ NPRM, 87 FR at 62750.
    \31\ Id.
    \32\ Id., Question 3 (Does the proposed rule contain a 
collection of information?) and Question 4 (Would the proposed rule, 
if promulgated, have a significant economic impact on a substantial 
number of small entities? If so, how could it be modified to avoid a 
significant economic impact on a substantial number of small 
entities?)
    \33\ NPRM, 87 FR at 62750.
    \34\ See, e.g., Anonymous, Cmt. on NPRM (Nov. 3, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0011 (describing 
impersonation of accounts payable in medical device industry); 
Bernadette Padilla, Cmt. on NPRM (Nov. 8, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0014 (describing police 
impersonation scam involving stolen PII); Anonymous Meeting Planner, 
Cmt. on NPRM (Dec. 6,

[[Page 15028]]

2022), https://www.regulations.gov/comment/FTC-2022-0064-0030 
(describing attendee list and hotel reservation impersonation 
scams); California IT in Education, Cmt. on NPRM (Nov. 9, 2022), 
https://www.regulations.gov/comment/FTC-2022-0064-0034 (describing 
attendee list impersonation scam); Illinois Landscape Contractors 
Association, Cmt. on NPRM (Dec. 12, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0038 (describing attendee 
list and hotel reservation impersonation scams).
    \35\ See e.g., Salina Maddox, Cmt. on NPRM (Oct. 22, 2022), 
https://www.regulations.gov/comment/FTC-2022-0064-0003 (spam calls); 
Tatiana Alvarez, Cmt. on NPRM (Nov. 22, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0008 (Romanian mob scam); 
Tinee Carraker, Cmt. on NPRM (Nov. 4, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0012 (foreclosure scam); 
Susan Rounsley, Cmt. on NPRM (Nov. 6, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0013 (violations of Do Not 
Call requirements).
    \36\ See, e.g., Suhkvir Singh/Rutgers Law School Students, Cmt. 
on NPRM (Nov. 22, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0019 (``Rutgers Law Students/Singh Cmt.''); AIM, the 
European Brands Association, Cmt. on NPRM (Dec. 13, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0041 (``AIM Cmt.''); The 
Messaging Malware Mobile Anti-Abuse Working Group, Cmt. on NPRM 
(Dec. 15, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0051 (``M3AAWG Cmt.''); The International Trademark Association, 
Cmt. on NPRM (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0054 (``INTA Cmt.''); Electronic Privacy Information 
Center, National Consumer Law Center, National Consumers League, 
Consumer Action, Consumer Federation of America, National 
Association of Consumer Advocates, and U.S. PIRG, Cmt. on NPRM (Dec. 
16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0070 
(``EPIC Cmt.''); Recording Industry Association of America, Cmt. on 
NPRM (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0064 (``RIAA Cmt.'').
    \37\ United States Patent and Trademark Office, Cmt. on NPRM at 
2-3 (Dec. 2, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0026 (``USPTO Cmt.''); INTA Cmt. on NPRM; United States 
Copyright Office, Cmt. on NPRM (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0067 (``USCO Cmt.''); The 
Toy Association, Inc., Cmt. on NPRM at 2 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0069 (``Toy Cmt.''); 
Cellular Telecommunications and Internet Association, Cmt. on NPRM 
(Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0066 (``CTIA Cmt.''); Marine Retailers Association of the Americas, 
National Marine Manufacturers Association, National RV Dealers 
Association, Cmt. on NPRM (Dec. 19, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0076 (``MRAA Cmt.'').
    \38\ See, e.g., USPTO Cmt. on NPRM at 2-3; USCO Cmt. on NPRM at 
2; Toy Cmt. on NPRM at 2; CTIA Cmt. on NPRM at 3; MRAA Cmt. on NPRM 
at 4. See also supra, note 25.
    \39\ USPTO Cmt. on NPRM at 2-3.
    \40\ MRAA Cmt. on NPRM at 4.
    \41\ USCO Cmt. on NPRM at 2-3.
    \42\ Id.; USPTO Cmt. on NPRM at 2.
    \43\ CTIA Cmt. on NPRM at 5, 7.
    \44\ Somos, Inc., Cmt. on NPRM at 2-3 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0068 (``Somos Cmt.'').
    \45\ In explaining the scope of the proposed rule, the NPRM 
provided an illustrative, but non-exhaustive, list of unlawful 
conduct that would be covered by the prohibitions against 
impersonating government and businesses. NPRM, 87 FR at 62746-47. 
That list merely provides examples as it would be impracticable to 
list all possible violative conduct.
    \46\ 16 CFR 310.4(a)(8).
    \47\ USTelecom Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 3-4; 
RIAA Cmt. on NPRM at 3; Anti-Phishing Working Group, Cmt. on NPRM at 
1-2 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0073 (``APWG Cmt.''), https://www.regulations.gov/comment/FTC-2022-0064-0073 (``APWG Cmt.''); Coalition for Online Accountability, 
Cmt. on NPRM at 1-3 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0074 (``COA Cmt.''); INTA Cmt. on NPRM at 8-
10; Coalition for a Secure & Transparent Internet, Cmt. on NPRM at 1 
(Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0065 (``CSTI Cmt.'').
    \48\ Id.
    \49\ M3AAWG Cmt. on NPRM at 3-4; RIAA Cmt. on NPRM at 3-4; AIM 
Cmt. on NPRM at 1; COA Cmt. on NPRM at 1-3; INTA Cmt. on NPRM at 8-
10.
    \50\ COA Cmt. on NPRM at 2.
    \51\ M3AAWG Cmt. on NPRM at 3-4; APWG Cmt. on NPRM at 1-2; see 
also APWG, Cmt. on Informal Hearing at 1-2 (Apr. 14, 2023), https://www.regulations.gov/comment/FTC-2023-0030-0027 (``APWG IH Cmt.'').
    \52\ See NPRM, 87 FR at 62746-47. The example of voice cloning--
a relatively new technology--emphasizes the need for an 
illustrative, but non-exhaustive, list of unlawful conduct. Audio 
deepfakes, including voice cloning, are generated, edited, or 
synthesized by artificial intelligence, or ``AI,'' to create fake 
audio that seems real. See Khanjani, et. al., How Deep are the 
Fakes? Focusing on Audio Deepfake: A Survey, available at https://arxiv.org/ftp/arxiv/papers/2111/2111.14203.pdf.
    \53\ Americans for Prosperity Foundation, Cmt. on NPRM at 1-2 
(Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0062 (``AFPF Cmt.'').
    \54\ Id. at 1.
    \55\ Public Law 93-637, 88 Stat. 2183 (1975).
    \56\ ANPR, 86 FR at 72904.
    \57\ Id.
    \58\ NPRM, 87 FR at 62750, Question 2.
    \59\ USPTO Cmt. on NPRM at 3-9; M3AAWG Cmt. on NPRM at 6-9; INTA 
Cmt. on NPRM at 3-5; Toy Cmt. on NPRM at 3-5; USCO Cmt. on NPRM at 
3-7; MRAA Cmt. on NPRM at 2-4.
    \60\ USPTO Cmt. on NPRM at 3-9; M3AAWG Cmt. on NPRM at 6-9; INTA 
Cmt. on NPRM at 3-5; Toy Cmt. on NPRM at 3-5; USCO Cmt. on NPRM at 
3-7; MRAA Cmt. on NPRM at 2-4.
    \61\ Toy Cmt. on NPRM at 3-5.
    \62\ USPTO Cmt. on NPRM at 3-9; USCO Cmt. on NPRM at 3-4;
    \63\ INTA Cmt. on NPRM at 3; M3AAWG Cmt. on NPRM at 7.
    \64\ M3AAWG Cmt. on NPRM at 9.
    \65\ Id.
    \66\ Id.
    \67\ NPRM, 87 FR at 62750, Question 5.
    \68\ USCO Cmt. on NPRM at 8; USPTO Cmt. on NPRM at 10; INTA Cmt. 
on NPRM at 6-7; M3AAWG Cmt. on NPRM at 9; MacLeod Cmt. on NPRM at 1-
2; AFPF Cmt. on NPRM at 3-6.
    \69\ NetChoice Cmt. on NPRM at 2; Toy Cmt. on NPRM at 2; 
ZoomInfo Technologies LLC, Cmt. on NPRM at 1-2 (Dec. 16, 2022), 
https://www.regulations.gov/comment/FTC-2022-0064-0079 (``Zoom NPRM 
Cmt.'').
    \70\ USCO Cmt. on NPRM at 8; USPTO Cmt. on NPRM at 10.
    \71\ USCO Cmt. on NPRM at 8.
    \72\ USPTO Cmt. on NPRM at 10.
    \73\ Id. at 9-10.
    \74\ MacLeod Cmt. on NPRM at 2; AFPF Cmt. on NPRM at 3; M3AAWG 
Cmt. on NPRM at 9.
    \75\ M3AAWG Cmt. on NPRM at 2; NetChoice Cmt. on NPRM at 2; Toy 
Cmt. on NPRM at 2; AFPF Cmt. on NPRM at 2, 4; Zoom Cmt. on NPRM at 
1; INTA Cmt. on NPRM at 5-6; William MacLeod, Cmt. on Informal 
Hearing at 5-7 (Apr. 14, 2023), https://www.regulations.gov/comment/FTC-2023-0030-0019 (``MacLeod IH Cmt.'').
    \76\ AFPF Cmt. on NPRM at 2, 4; see also MacLeod IH Cmt. at 2.
    \77\ AFPF Cmt. on NPRM at 3, 4. M3AAWG Cmt. on NPRM at 2; 
NetChoice Cmt. on NPRM at 2; INTA Cmt. on NPRM at 5-6; Toy Cmt. on 
NPRM at 2; Zoom Cmt. on NPRM at 1; MacLeod IH Cmt. at 5-7.
    \78\ AFPF Cmt. on NPRM at 2, 6.
    \79\ NetChoice Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 3.
    \80\ AFPF Cmt. on NPRM at 4; INTA Cmt. on NPRM at 5-6; Toy Cmt. 
on NPRM at 2; Zoom Cmt. on NPRM at 1; MacLeod IH Cmt. at 5.
    \81\ MacLeod IH Cmt. at 1; see also MacLeod Cmt. on NPRM at 1.
    \82\ MacLeod IH Cmt. at 2.
    \83\ Id. at 3.
    \84\ Id. at 3.
    \85\ AFPF Cmt. on NPRM at 3-4.
    \86\ Id. at 3, 5-6.
    \87\ M3AAWG Cmt. on NPRM at 9.
    \88\ Id. at 1, 5.
    \89\ AFPF Cmt. on NPRM at 5.
    \90\ See 15 U.S.C. 45(m)(1)(A).
    \91\ See Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of 
N.Y., 447 U.S. 557, 563-64 (1980) (``[T]here can be no 
constitutional objection to the suppression of commercial messages 
that do not accurately inform the public about lawful activity. The 
government may ban forms of communication more likely to deceive the 
public than to inform it, or commercial speech related to illegal 
activity.'') (citations omitted); see also Zauderer v. Office of 
Disciplinary Counsel, 471 U.S. 626, 638 (1985) (holding it is ``well 
settled'' that ``[t]he States and the Federal Government are free

[[Page 15029]]

to prevent the dissemination of commercial speech that is false, 
deceptive, or misleading'').
    \92\ USPTO Cmt. on NPRM; Anonymous, Cmt. on NPRM (Dec. 9, 2022), 
https://www.regulations.gov/comment/FTC-2022-0064-0033 (``0033 
Cmt.''); AIM Cmt. on NPRM; Erik M. Pelton & Associates, PLLC, Cmt. 
on NPRM (Dec. 14, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0045; NetChoice Cmt. on NPRM; M3AAWG Cmt. on NPRM; 
Consumer Technology Association, Cmt. on NPRM (Dec. 16, 2022), 
https://www.regulations.gov/comment/FTC-2022-0064-0073 (``CTA 
Cmt.''); NCTA--The internet and Television Association, Cmt. on NPRM 
(Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0071 (``NCTA Cmt.''); ASAE Cmt. on NPRM; INTA Cmt. on NPRM; Somos 
Cmt. on NPRM; CTIA Cmt. on NPRM; USCO Cmt. on NPRM; USTelecom Cmt. 
on NPRM; American Society of Association Executives, Center for 
Exhibition Industry Research Destinations International, Exhibition 
Services & Contractors Association, Exhibitions & Conferences 
Alliance, Experiential Designers + Producers Association, 
International Association of Exhibitions & Events, International 
Association of Venue Managers, PCMA, Society of Independent Show 
Organizers, UFI, Cmt. on NPRM (Dec 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0060 (``ECA Cmt.''); RIAA 
Cmt. on NPRM; American Bar Association Section of Intellectual 
Property Law, Cmt. on NPRM at 3 (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0061 (``ABA-IPL Cmt.''); 
AFPF Cmt. on NPRM; Zoom Cmt. on NPRM; American Bankers Association, 
ACA International, American Association of Healthcare Administrative 
Management, Credit Union National Association, Mortgage Bankers 
Association National Association of Federally-Insured Credit Unions 
(the Associations), Cmt. on NPRM (Dec. 16, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0080 (``Assocns. Cmt.''); 
COA Cmt. on NPRM; MacLeod Cmt. on NPRM; Brown Cmt. on NPRM.
    \93\ A copy of the transcript of the May 4, 2023 Informal 
Hearing is available at https://www.ftc.gov/system/files/ftc_gov/pdf/impersonationruleinformalhearingtranscript.pdf. References to 
the transcript from the May 4, 2023 Informal Hearing are cited 
herein as: Name of commenter, May 2023 Tr at page no. (e.g., Doe, 
May 2023 Tr at #); see CTA, May 2023 Tr at 16; MacLeod, May 2023 Tr 
at 27; USTelecom, May 2023 Tr at 30; Chilson, May 2023 Tr at 34; 
VON, May 2023 Tr at 36; American Bankers Association (ABA), May 2023 
Tr at 39-40; INCOMPAS, May 2023 Tr at 42, 44; NCTA, May 2023 Tr at 
51-52.
    \94\ USPTO Cmt. on NPRM at 10; USCO Cmt. on NPRM at 8; RIAA Cmt. 
on NPRM at 3; ABA, May 2023 Tr at 39-40.
    \95\ USPTO Cmt. on NPRM at 10; USCO Cmt. on NPRM at 8; RIAA Cmt. 
on NPRM at 3; ABA, May 2023 Tr at 39-40.
    \96\ AFPF Cmt. on NPRM at 3-5; MacLeod IH Cmt. at 6-7; McLeod, 
May 2023 Tr at 27.
    \97\ 0033 Cmt. on NPRM; ABA-IPL Cmt. on NPRM at 2; Zoom Cmt. on 
NPRM at 1.
    \98\ ABA-IPL Cmt. on NPRM at 1-2; NetChoice Cmt. on NPRM at 2; 
USTelecom Cmt. on NPRM at 2; see also CTA, May 2023 Tr at 16; VON, 
May 2023 Tr at 36; ABA, May 2023 Tr at 39-40; INCOMPAS, May 2023 Tr 
at 42.
    \99\ NetChoice Cmt. on NPRM at 2; CTA Cmt. on NPRM; American 
Society of Association Executives, Cmt. on NPRM at 1 (Dec. 16, 
2022), https://www.regulations.gov/comment/FTC-2022-0064-0057 
(``ASAE Cmt.''); INTA Cmt. on NPRM; Somos Cmt. on NPRM; CTIA Cmt. on 
NPRM at 7; USTelecom Cmt. on NPRM at 2; ECA Cmt. on NPRM at 3; ABA-
IPL Cmt. on NPRM at 3; Zoom Cmt. on NPRM at 2; Cmt. on NPRM at 3; 
see also CTA, May 2023 Tr at 16; MacLeod, May 2023 Tr at 27; 
USTelecom, May 2023 Tr at 30; Chilson, May 2023 Tr at 34; VON, May 
2023 Tr at 36; INCOMPAS, May 2023 Tr at 42, 44; NCTA, May 2023 Tr at 
51-52.
    \100\ CTA Cmt. on NPRM at 7.
    \101\ USTelecom Cmt. on NPRM at 2.
    \102\ ABA-IPL Cmt. on NPRM at 3.
    \103\ NCTA Cmt. on NPRM at 2.
    \104\ M3AAWG Cmt. on NPRM at 10.
    \105\ Brown Cmt. on NPRM at 8.
    \106\ M3AAWG Cmt. on NPRM at 3.
    \107\ COA Cmt. on NPRM at 3; M3AAWG Cmt. on NPRM at 4-5. ``WHOIS 
data'' is a commonly used internet record listing that identifies 
who owns a domain and how to get in contact with them.
    \108\ See, e.g., Compl. at 3-5 & Ex. H, FTC v. Moore, No. 5:18-
cv-01960 (C.D. Cal. filed Sept. 13, 2018) (alleging that a seller of 
variety of fake but genuine-looking financial documents provided to 
others the means and instrumentalities with which to make 
misrepresentations regarding a person's identity).
    \109\ NPRM, 87 FR at 62746.
    \110\ Id. at 62751; see also 15 U.S.C. 44.
    \111\ NPRM, 87 FR at 62747.
    \112\ Id. at 62750.
    \113\ Minnesota Nursery & Landscape Association, Cmt. on NPRM at 
2 (Dec. 2, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0027; Louise Nemmers, Cmt. on NPRM (Dec. 5, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0028; California Landscape 
Contractors Association, Cmt. on NPRM (Dec. 6, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0029; Outdoor Power 
Equipment Institute, Cmt. on NPRM at 2 (Dec. 7, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0032; AIM Cmt. on NPRM at 
2; AARP, Cmt. on NPRM (Dec. 14, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0043 (``AARP Cmt.''); Minnesota Municipal 
Utilities Association, Cmt. on NPRM (Dec. 14, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0048; M3AAWG Cmt. on NPRM 
at 10; CTA Cmt. on NPRM; ASAE Cmt. on NPRM; INTA Cmt. on NPRM; Toy 
Cmt. on NPRM at 6; RIAA Cmt. on NPRM at 2; National Association of 
Broadcasters, Cmt. on NPRM (Dec. 19, 2022), https://www.regulations.gov/comment/FTC-2022-0064-0075; MRAA Cmt. on NPRM at 
4.
    \114\ See, e.g., Toy Cmt. on NPRM at 6; MRAA Cmt. on NPRM at 4; 
AARP Cmt. at 2; CTA Cmt. on NPRM at 1; ASAE Cmt. on NPRM; RIAA Cmt. 
on NPRM at 1; INTA Cmt. on NPRM at 2.
    \115\ AIM Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 10; CTA Cmt. 
on NPRM at 1.
    \116\ Toy Cmt. on NPRM at 6; INTA Cmt. on NPRM at 6.
    \117\ Toy Cmt. on NPRM at 6; RIAA Cmt. on NPRM at 3.
    \118\ INTA Cmt. on NPRM at 6; Toy Cmt. on NPRM at 6.
    \119\ NPRM, 87 FR at 62750.
    \120\ Rutgers Law Students/Singh Cmt. on NPRM; AIM Cmt. on NPRM; 
AARP Cmt. on NPRM; NCTA Cmt. on NPRM; EPIC Cmt. on NPRM; RIAA Cmt. 
on NPRM.
    \121\ AIM Cmt. on NPRM at 2; Rutgers Law Students/Singh Cmt. on 
NPRM at 1.
    \122\ Rutgers Law Students/Singh Cmt. on NPRM at 1-2; AARP Cmt. 
on NPRM at 2; EPIC Cmt. on NPRM at 5.
    \123\ Rutgers Law Students/Singh Cmt. on NPRM at 1-2.
    \124\ Rutgers Law Students/Singh Cmt. on NPRM at 2-4; AARP Cmt. 
on NPRM at 1-2; EPIC Cmt. on NPRM at 4-5.
    \125\ AARP Cmt. on NPRM at 2.
    \126\ EPIC Cmt. on NPRM at 5.
    \127\ NCTA Cmt. on NPRM at 3, 8.
    \128\ Id.
    \129\ RIAA Cmt. on NPRM at 3.
    \130\ Id. at 2.
    \131\ Rutgers Law Students/Singh Cmt. on NPRM at 2.
    \132\ Id.
    \133\ Id. at 3.
    \134\ Id.
    \135\ Id. at 3-4.
    \136\ Id.; NCTA Cmt. on NPRM at 8, n. 16.
    \137\ The Commission also is exploring other tools to address 
the fake endorsement concerns raised by the RIAA and Rutgers Law 
School Students. Specifically, in the Commission's proposed Rule on 
the Use of Consumer Reviews and Testimonials, Sec.  465.2 would 
prohibit businesses from purchasing a consumer review, or from 
disseminating or causing the dissemination of a consumer testimonial 
or celebrity testimonial when the business knew or should have known 
it was false or fake. See Fed. Trade Comm'n, Notice of Proposed 
Rulemaking: Trade Regulation Rule on the Use of Consumer Reviews and 
Testimonials, 88 FR 49364, 49391 (Jul. 31, 2023), https://www.federalregister.gov/documents/2023/07/31/2023-15581/trade-regulation-rule-on-the-use-of-consumer-reviews-and-testimonials#sectno-reference-465.2.
    \138\ USTelecom Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 3-4; 
RIAA Cmt. on NPRM at 3; APWG Cmt. on NPRM; COA Cmt. on NPRM at 1-3; 
INTA Cmt. on NPRM at 8-10; CSTI Cmt. on NPRM at 1.
    \139\ Id.
    \140\ M3AAWG Cmt. on NPRM at 3-4; RIAA Cmt. on NPRM at 3-4; AIM 
Cmt. on NPRM at 1; COA Cmt. on NPRM at 1-3; INTA Cmt. on NPRM at 8-
10.
    \141\ COA Cmt. on NPRM at 2.
    \142\ M3AAWG Cmt. on NPRM at 3-4; APWG Cmt. on NPRM at 1-2; see 
also APWG, Cmt. on Informal Hearing at 1-2 (Apr. 14, 2023), https://www.regulations.gov/comment/FTC-2023-0030-0027 (``APWG IH Cmt.'').
    \143\ See also supra, note 52.

[[Page 15030]]

    \144\ Toy Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 2; ABA-IPL 
Cmt. on NPRM at 3; INTA Cmt. on NPRM at 2.
    \145\ ABA-IPL Cmt. on NPRM at 3.
    \146\ Toy Cmt. on NPRM at 2; M3AAWG Cmt. on NPRM at 2; INTA Cmt. 
on NPRM at 2.
    \147\ INTA Cmt. on NPRM at 6-7.
    \148\ NPRM, 87 FR at 62750.
    \149\ See 15 U.S.C. 57b-3(b)(2).
    \150\ 15 U.S.C. 57b-3(b)(2)(A).
    \151\ See 5 U.S.C. 603-605; see also section 22(b) of the FTC 
Act, 15 U.S.C. 57b-3(b).
    \152\ NPRM, 87 FR at 62749-50; see also 5 U.S.C. 603.
    \153\ NPRM, 87 FR at 62750.
    \154\ NPRM, 87 FR at 62749.
    \155\ See 15 U.S.C. 57b-3(b)(3)(A)(ii) (``In order to avoid 
duplication or waste, the Commission is authorized to . . . whenever 
appropriate, incorporate any data or analysis contained in a 
regulatory analysis issued under this subsection in the statement of 
basis and purpose.'').
    \156\ NPRM, 87 FR at 62749-50.
    \157\ See ANPR, 86 FR at 72901 & n.24 (discussing AMG Cap. 
Mgmt.); NPRM, 87 FR at 62746 (same).
    \158\ See ANPR, 86 FR at 72901 & n.24; NPRM, 87 FR at 62746; see 
also 15 U.S.C. 57b(a) and (b).
    \159\ See 15 U.S.C. 45(m)(1)(A).
    \160\ NPRM, 87 FR at 62750.
    \161\ Only one commenter suggested an alternative to regulation, 
which the Commission declines to adopt for the reasons previously 
stated in Section III.B.
    \162\ See supra note 161.
    \163\ Toy Cmt. on NPRM at 5-6; MRAA Cmt. on NPRM at 4.
    \164\ Robert Kamerschen, Cmt. on NPRM at 2 (Nov. 30, 2022), 
https://www.regulations.gov/comment/FTC-2022-0064-0023.
    \165\ See NPRM, 87 FR at 62750.
    \166\ NPRM, 87 FR at 62748.
    \167\ Id.
    \168\ See Fed. Trade Comm'n, Explore Government Imposter Scams, 
TABLEAU PUBLIC, https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/SubcategoriesOverTime 
(last visited December 21, 2023).
    \169\ Id.
    \170\ See 15 U.S.C. Secs. 45(m)(1)(A) and 57b.
    \171\ See Toy Cmt. on NPRM at 5-6; MRAA Cmt. on NPRM at 4; see 
also NPRM, 87 FR at 62749.
    \172\ NPRM, 87 FR at 62750.
    \173\ See, e.g., TSR, 16 CFR 310.3(a)(2)(vii); R-Value Rule, 16 
CFR 460.21; Regulation O (Mortgage Assistance Relief Services), 12 
CFR 1015.3(b)(3).
    \174\ 5 U.S.C. 551 et seq.; 16 CFR 1.7 through 1.20.

List of Subjects in 16 CFR Part 461

    Consumer protection, Impersonation, Trade Practices.


0
For the reasons set forth above, the Federal Trade Commission amends 16 
CFR Chapter I by adding part 461 to read as follows:

PART 461--RULE ON IMPERSONATION OF GOVERNMENT AND BUSINESSES

Sec.
461.1 Definitions.
461.2 Impersonation of Government Prohibited.
461.3 Impersonation of Businesses Prohibited.
Authority: 15 U.S.C. 41 through 58.


Sec.  461.1  Definitions.

    As used in this part:
    Business means a corporation, partnership, association, or any 
other entity that provides goods or services, including not-for-profit 
entities.
    Government includes federal, state, local, and tribal governments 
as well as agencies and departments thereof.
    Materially means likely to affect a person's choice of, or conduct 
regarding, goods or services.
    Officer includes executives, officials, employees, and agents.


Sec.  461.2  Impersonation of Government Prohibited.

    It is a violation of this part, and an unfair or deceptive act or 
practice to:
    (a) materially and falsely pose as, directly or by implication, a 
government entity or officer thereof, in or affecting commerce as 
commerce is defined in the Federal Trade Commission Act (15 U.S.C. 44); 
or
    (b) materially misrepresent, directly or by implication, 
affiliation with, including endorsement or sponsorship by, a government 
entity or officer thereof, in or affecting commerce as commerce is 
defined in the Federal Trade Commission Act (15 U.S.C. 44).


Sec.  461.3  Impersonation of Businesses Prohibited.

    It is a violation of this part, and an unfair or deceptive act or 
practice to:
    (a) materially and falsely pose as, directly or by implication, a 
business or officer thereof, in or affecting commerce as commerce is 
defined in the Federal Trade Commission Act (15 U.S.C. 44); or
    (b) materially misrepresent, directly or by implication, 
affiliation with, including endorsement or sponsorship by, a business 
or officer thereof, in or affecting commerce as commerce is defined in 
the Federal Trade Commission Act (15 U.S.C. 44).

    By direction of the Commission.
April J. Tabor,
Secretary.

    Note: The following statement will not appear in the Code of 
Federal Regulations.

Statement of Chair Lina M. Khan Joined by Commissioner Rebecca Kelly 
Slaughter and Commissioner Alvaro M. Bedoya

    Today the Federal Trade Commission finalizes its rule prohibiting 
government and business impersonation schemes and issues a supplemental 
notice of proposed rulemaking to extend this prohibition to 
impersonation of individuals. This final rule marks the first time 
since 1980 that the Commission has finalized a brand-new trade 
regulation rule prohibiting an unfair or deceptive practice.
    Impersonation schemes cheat Americans out of billions of dollars 
every year. Fraudsters pretending to represent government agencies--
like the Social Security Administration or the IRS--tell targets that 
if they do not hand over money or their sensitive personal information, 
then they could lose a government benefit, face a tax liability, or 
even be arrested. Scammers also commonly claim false affiliations with 
household brand names to bilk consumers for bogus services. This 
category of fraud skyrocketed during the coronavirus pandemic--with 
imposters scamming Americans out of reported $2 billion between October 
2020 and September 2021, an 85 percent increase year-over-year.\1\ 
Losses remain high: FTC data show that in 2023 consumers reported 
losing $2.7 billion to reported imposter scams.\2\ Impersonation fraud 
has remained one of the largest sources of total reported consumer 
financial losses for several years.\3\
---------------------------------------------------------------------------

    \1\ Fed. Trade Comm'n, Fraud Reports: Trends Over Time (2021), 
https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/FraudFacts.
    \2\ Fed. Trade Comm'n, Consumer Sentinel Network Data Book 2023 
(2024), https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2023.
    \3\ Fed. Trade Comm'n, Fraud Reports: Top Reports, Tableau 
Public (last accessed Feb. 8, 2024), https://public.tableau.com/app/profile/federal.trade.commission/viz/FraudReports/TopReports; see 
also Fed. Trade Comm'n, Consumer Sentinel Network Data Book 2020 
(2021) at 4-8, https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-databook-2020/csn_annual_data_book_2020.pdf; see also, Consumer Sentinel Network 
Data Book 2023, supra note 2.
---------------------------------------------------------------------------

    Public comments submitted to the Commission provide a snapshot of 
how impersonation frauds can devastate:
    <bullet> One commenter reported on how a friend was scammed by 
someone claiming that they were with Publisher's Clearing House and 
that she had won a sweepstakes. Her friend was scammed out of a total 
of $367,000: ``She used all of her savings . . . to help her 
grandchildren go to college and wiped out her IRA and now is left to 
pay the

[[Page 15031]]

penalties for depleting it. This woman is now, at age 70, in a position 
of living only on her social security and has to try to find work. . . 
.'' \4\
---------------------------------------------------------------------------

    \4\ Comment Submitted by Anonymous, FTC Seek Comments on 
Advanced Notice of Proposed Rule; Impersonation ANPR, 
Regulations.gov (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0131.
---------------------------------------------------------------------------

    <bullet> Another commenter received a call from someone claiming to 
be with the U.S. Treasury Department, who asserted that her social 
security number had been compromised. This person lost all her money: 
``That money is from my mother's life insurance policy who passed in 
2019. My father needs that money to survive. I am devastated.'' \5\
---------------------------------------------------------------------------

    \5\ Comment Submitted by Jamila Sherman, FTC Seek Comments on 
Advanced Notice of Proposed Rule; Impersonation ANPR, 
Regulations.gov (Feb. 22, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0127.
---------------------------------------------------------------------------

    <bullet> A third commenter spoke of her mother being scammed by 
someone pretending to be with a government agency: ``Before we, her 
family, realized the extent to which the imposters preyed upon her, she 
had divulged identity and banking information.'' \6\
---------------------------------------------------------------------------

    \6\ Comment Submitted by Susan Frost, FTC Seek Comments on 
Advanced Notice of Proposed Rule; Impersonation ANPR, 
Regulations.gov (Feb. 16, 2022), https://www.regulations.gov/comment/FTC-2021-0077-0031.
---------------------------------------------------------------------------

    The rise of generative AI technologies risks making these problems 
worse by turbocharging scammers' ability to defraud the public in new, 
more personalized ways. For example, the proliferation of AI chatbots 
gives scammers the ability to generate spear-phishing emails using 
individuals' social media posts and to instruct bots to use words and 
phrases targeted at specific groups and communities.\7\ AI-enabled 
voice cloning fraud is also on the rise, where scammers use voice-
cloning tools to impersonate the voice of a loved one seeking money in 
distress or a celebrity peddling fake goods.\8\ Scammers can use these 
technologies to disseminate fraud more cheaply, more precisely, and on 
a much wider scale than ever before.
---------------------------------------------------------------------------

    \7\ Bob Violino, AI Tools Such As ChatGPT Are Generating A 
Mammoth Increase In Malicious Phishing Emails, CNBC (Nov. 28, 2023), 
https://www.cnbc.com/2023/11/28/ai-like-chatgpt-is-creating-huge-increase-in-malicious-phishing-email.html.
    \8\ Eric Revell, AI Voice Cloning Scams On The Rise, Expert 
Warns, Fox Business (Sept. 23, 2023), https://www.foxbusiness.com/technology/ai-voice-cloning-scams-on-rise-expert-warns.
---------------------------------------------------------------------------

    In its supplemental NPRM, the Commission proposes to expand the 
rule's prohibitions to also cover impersonation of individuals. If 
adopted, this additional protection will equip enforcers to seek civil 
penalties and redress when fraudsters impersonate individual people, 
not just government or business entities. Given the proliferation of 
AI-enabled fraud, this additional protection seems especially critical. 
Notably, the supplemental proposal also recommends extending liability 
to any actor that provides the ``means and instrumentalities'' to 
commit an impersonation scam. Under this approach, liability would 
apply, for example, to a developer who knew or should have known that 
their AI software tool designed to generate deepfakes of IRS officials 
would be used by scammers to deceive people about whether they paid 
their taxes. Ensuring that the upstream actors best positioned to halt 
unlawful use of their tools are not shielded from liability will help 
align responsibility with capability and control.
    By unlocking civil penalties and redress, the final rule, along 
with the proposed supplemental provisions, will promote both more 
efficient enforcement and greater deterrence. In 2020, the Supreme 
Court held that the Commission cannot rely on Section 13(b) of the FTC 
Act to get money back to defrauded consumers,\9\ so rulemakings--while 
not a substitute for a legislative fix--can help ensure that 
lawbreakers do not profit from their lawbreaking and that wronged 
consumers can be made whole.
---------------------------------------------------------------------------

    \9\ AMG Cap. Mgmt., LLC v. FTC, 593 U.S. (2021).
---------------------------------------------------------------------------

    This rule marks the agency's first brand-new Section 18 rulemaking 
since 1980. Although the authority to issue rules is clearly laid out 
in the FTC Act, bureaucratic red tape presented an obstacle to the 
agency's exercise of this important statutory authority. Thanks to 
efforts initiated under Commissioner Slaughter's leadership to align 
the procedural requirements for Section 18 rulemaking with the FTC 
Act's statutory text, Section 18 rulemakings can now proceed more 
efficiently.\10\ This effort took two years from proposal to final 
rule, finally putting lie to the old idea that this must be an 
impossibly long process.
---------------------------------------------------------------------------

    \10\ Press Release, Fed. Trade Comm'n, FTC Votes to Update 
Rulemaking Procedures, Sets Stage for Stronger Deterrence of 
Corporate Misconduct (July 1, 2021), https://www.ftc.gov/news-events/news/press-releases/2021/07/ftc-votes-update-rulemaking-procedures-sets-stage-stronger-deterrence-corporate-misconduct.
---------------------------------------------------------------------------

    Many thanks to the FTC team for their swift work and dedication. 
This rule banning government and business impersonation will allow us 
to more vigorously and effectively protect Americans from fraudsters. 
And we are eager for public input on the supplemental NPRM that would 
extend this rule to cover impersonation of individuals. With the rapid 
rise of voice cloning fraud and other AI-based scams, additional 
protection for consumers seems especially critical. As these 
technologies enable more sophisticated and innovative forms of fraud, 
we will continue to ensure the Commission is activating all the tools 
Congress has given us and faithfully executing on our statutory 
mandate.

[FR Doc. 2024-04335 Filed 2-29-24; 8:45 am]
BILLING CODE 6750-01-P