Telemarketer crackdown could be an ad biz boon

Telemarketer crackdown
could be an ad biz boon

Feds looking to build free do-not-call registry

By Jeff Bercovici

  Telemarketers, pretty much anyone with a phone will agree, are a nuisance.
    But are they enough of a nuisance that the federal government ought to step in and protect consumers from them?
    That's a question being asked in Washington, D.C., and the answer is certain to have major ramifications for the direct marketing industry.
    It also has the potential to send ripples through the wider media world in the form of millions, or even billions, of dollars now being spent on telemarketing being redirected into spending on traditional forms of advertising.
    At the heart of the issue is a proposal put forth last week by the Federal Trade Commission to rewrite the Telephone Marketing Sales rules, the set of regulations governing telemarketing practices.
    The biggest change could come from a provision calling for the creation of a national do-not-call registry.
    If such a registry were established, anyone who wished to could, with a single toll-free phone call, place his or her phone number on a list of households that would be off-limits to most telemarketers. A telemarketer calling households on the list would face fines of up to $11,000 per call.
    It would be a huge blow to an industry that employs six million people and that last year generated $668 billion in sales, according to numbers supplied by the Direct Marketing Association.
    Not surprisingly, the trade association has said that it is opposed to the establishment of a national do-not-call list, calling it a potential infringement of commercial speech rights protected by the First Amendment.
    Moreover, it's redundant and unnecessary, says Christina Duffney, director of media relations for the DMA.
    Telemarketers, claims Duffney, have no interest in harassing people who don't want to be harassed.
    "As far as a telemarketer is concerned, if a consumer is requesting to be put on a do-not-call list, he or she obviously has no interest in purchasing anything from a telemarketer," she says. "That time could be better spent marketing to somebody who's open to that method."
    That's why the DMA maintains its own opt-out list, called the Telephone Preferences Service. The list contains about 4.1 million numbers that are off-limits to the 5,000 or so DMA member companies.
    Furthermore, about 20 states already have their own do-not-call lists, though the rules of each vary from state to state.
    "What we're worried about is having to comply with yet more rules and regulations while spending taxpayers’ money on something that already exists," says Duffney.
    But it doesn't exist, not really, says Eileen Harrington, the FTC's associate director for marketing practices.
    "It isn't redundant because the [DMA’s] do-not-call list is purely voluntary," says Harrington. "This would be required by law. This would give consumers pretty meaningful legal protection for their privacy preferences."
    There's no way of knowing how many consumers would take advantage of such protection, but logic suggests it would be a very large number indeed--far more than the 4.1 million on the DMA's list.
   The only two ways to register with the Telephone Preferences Service are on the internet, which involves paying a $5 "processing fee," and by mail. And the DMA does very little to publicize the list other than posting links on its two main web sites.
   The federal list, in contrast, would be free, easy to register with and widely publicized, possibly through newspaper or television advertising campaigns.
   In cases where similar programs exist on the state level, they have encountered a strong response, says the FTC's Harrington.
     In Missouri, 41 percent of households have placed themselves on the do-not-call list. In Indiana, it's 38.5 percent, 30 percent in New York and 29 percent in Tennessee.
    If the same pattern were seen on the national level, it would be a tremendous loss for the telemarketing industry, which comprises the largest segment of the direct marketing industry, accounting for $76.2 billion in advertising expenditures last year.
    Banks and telecommunications companies are the biggest telemarketing spenders, and it's hard not to imagine them shifting their ad dollars elsewhere if the pool of available telephone households shrinks by a third or more, as it could if the new regulations go into effect next year.
    (Under its charter, the FTC can’t regulate banks or telecoms, but the FCC can, and in all likelihood it would follow the lead of its sister agency in the matter, says Harrington.)
    Direct mail, television, newspapers, magazines and radio all stand to benefit from what could prove to be the end of telemarketing as we know it.

-Jeff Bercovici is a staff writer for Media Life.

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