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Our client, Senior Living Lending, Inc. ("SLL") is a reverse mortgage and home equity line of credit lender. They want to implement a telemarketing program that relies heavily upon texting potential borrowers. SLL has heard that financial institutions are exempt from the Telemarketing Sales Rule ("TSR"). Reply in here, explaining whether they are exempt from the TSR. 

After reviewing exemptions to the Telemarketing Sales Rule ("TSR"), we have determined that Senior Living Lending, Inc. ("SLL") is not exempt from the Telemarketing Sales Rule "TSR". As a is a lender that focuses on reverse mortgages and non-traditional home equity lines of credit ("HELOCs"), the "financial institution" exemption to the TSR will not apply to SLL.

# FTC Jurisdiction
The Federal Trade Commission (FTC) is an independent agency that exists within the executive branch of the government but also maintains a degree of autonomy from the day-to-day workings of the executive branch. The FTC has jurisdiction over most for-profit businesses to enforce antitrust and consumer protection laws. The FTC protects consumers from unfair or deceptive acts and practices across most industries, including matters of advertising, marketing, and data privacy for many companies. 

The FTC implemented the Telemarketing Sales Rule (TSR) in 1995 as part of the guidelines for regulating industry under the Telemarketing and Consumer Fraud and Abuse Prevention Act. The TSR regulates sales and marketing phone calls and text messages. Although the TSR is regulated jointly by the FTC and Federal Communications Commission ("FCC"), the FTC  issued the TSR, and the rule is therefore subject to the jurisdiction of the FTC Act. Specific institutions are not regulated under the FTC Act, including specific financial institutions like banks and credit unions and insurance companies (as outline below), and some common carriers like airlines and telecommunications companies.

# TSR Exemption for Financial Institutions
The TSR exemption for financial institutions applies to a few types of financial services entities: (1) banks, credit unions and savings and loans not subject to FTC jurisdiction,  (2)brokers, dealers, transfer agents, futures commission merchants and similar entities regulated by the SEC and Commodity Futures Trading Commission, (3) insurance providers regulated by state law. 

	1. Banks. Banks, federal credit unions and federal savings and loans, which are not subject to the jurisdiction of the FTC. Nevertheless, any individual or company that contracts with one of these three types of entities to provide telemarketing services must comply with the TSR. For example,  a non-bank company that contracts with a bank to provide telemarketing services on the bank’s behalf is covered by the TSR. 

	2. Broker Dealers. In addition, entities and individuals associated that sell investments and are subject to the jurisdiction of the Securities and Exchange Commission or the Commodity Futures Trading Commission are not covered by the TSR — even if they engage in a plan, program, or campaign to sell through interstate telephone calls. However, these entities and individuals are covered by the FCC’s telemarketing rules. These entities are: brokers, dealers, transfer agents, municipal securities dealers, municipal securities brokers, government securities brokers, and government securities dealers (as those terms are defined in Section 202(a)(11) of the Investment Advisers Act of 1940); and futures commission merchants, including brokers, commodity trading advisers, commodity pool operators, leverage transaction merchants, floor brokers, or floor traders (as those terms are defined in Section 6(1) of the Commodity Exchange Act).
	
	3. Insurance Entities. The McCarran-Ferguson Act provides that the FTC Act, and by extension, the TSR, are applicable to the business of insurance to the extent that such business is not regulated by state law. Whether the McCarran-Ferguson exemption removes insurance-related telemarketing from coverage of the TSR depends on the extent to which state law regulates insurance telemarketing.  If state law regulates the telemarketing at issue and enforcement of the TSR would conflict with and effectively supersede those state laws, then the TSR would not apply.  Unlike the jurisdictional exemptions for banks and non-profit organizations, which do not extend to third-party telemarketers making calls on their behalf, in the case of the telemarketing of insurance products and services, the TSR does not necessarily apply simply because the campaign is conducted by a third-party telemarketer.

# FTC Jurisdiction Over Mortgage Lenders
Mortgage and HELOC lenders do not fall under the above categories unless they are registered as a bank or similar entity already regulated by the CFPB, OCC or SEC. 

Per the FTC website, mortgage lending practices seem to be squarely within FTC jurisdiction. The FTC website includes the following guidance: 
"The FTC’s authority covers for-profit entities such as mortgage companies, mortgage brokers, creditors, and debt collectors – but not banks, savings and loan institutions, and federal credit unions." 

It is important to note that the FTC has specifically enforced the TSR in past against several mortgage lending companies.

For example, in 2013, the FTC announced that Mortgage Investors Corporation of Ohio, Inc. (“Mortgage Investors”) would have to pay a $7.5 million civil penalty for alleged violations of the TSR. Mortgage Investors is one of the largest refinancers of veterans’ home loans. In its complaint, the FTC alleged that in promoting its home loan refinancing services, Mortgage Investors placed more than 5.4 million calls to telephone numbers listed on the National Do Not Call Registry and failed to remove consumers from its internal call lists when they so requested. Mortgage Investor telemarketers led consumers to believe that low interest, fixed rate mortgages were available at no cost when in reality Mortgage Investors offered only adjustable rate mortgages in which consumers’ payments would increase with rising interest rates and would require consumers to pay closing costs. Telemarketers for Mortgage Investors also allegedly misled consumers about their affiliation with the Department of Veterans Affairs.

In 2006, the FTC also announced that USA Home Loans Inc., a mortgage services company, and telemarketer USA First Investment Group Inc., violated the TSR while marketing mortgage products and services, including originating and refinancing home loans. The two companies and their principals violated the TSR by calling telephone numbers listed on the National Do Not Call Registry and failing to pay the required fee for access to numbers listed on the Registry. The settlement includes a $426,782 civil penalty against USA Home Loans Inc. and its owner, David Vach, which is suspended except for $35,000, contingent upon the accuracy and completeness of their financial statements, and an $85,356 civil penalty against USA First Investment Group Inc. and its principals, Richard Burnham and Vincent Piccione, which is suspended, contingent upon the accuracy and completeness of their financial statements. 

# Conclusion
SLL must ensure full compliance with the Telemarketing Sales Rule, as its lending activities fall squarely within the FTC’s jurisdiction and are subject to enforcement. Let's schedule a call to discuss how we can ensure your new marketing campaign complies with TSR requirements.