The Federal Telemarketing Sales Rule prohibits sellers and telemarketers from making false or misleading statements to induce consumers to buy goods or services or make charitable contributions. The Rule prohibits both express and implied misrepresentations. An implied misrepresentation gives a consumer a false impression about goods, services, or an offer.

Misrepresentations in Sales Transactions

In sales transactions, the Rule prohibits sellers and telemarketers from making misrepresentations about:

(1) the cost or quantity of the goods or services that are offered for sale;

(2) the material restrictions, limitations, and conditions that apply to the offer;

(3) the performance, efficacy, or central characteristics of goods or services;

(4) the refund, repurchase, exchange, or cancellation policies of the seller;

(5) the material aspects of a prize promotion;

* A "prize promotion" is any sweepstakes or other game of chance or any representation that a person has won or been selected to receive a free prize.

(6) the material aspects of an investment opportunity;

(7) the seller's affiliation with or sponsorship or endorsement by a person, organization, or government entity;

(8) the benefits of a credit card loss protection plan; and

* A "credit card loss protection plan" claims to protect, insure, or otherwise limit a consumer's liability for the unauthorized use of his or her credit card.

(9) negative option features of an offer.

* A "negative option feature" exists when a seller interprets a consumer's silence or failure to affirmatively reject goods or services or cancel an agreement as acceptance of an offer.

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