New York has sent dozens of letters to firms it suspects are reselling or redistributing its do-not-call list in violation of a new state law.
But it isn’t doing this solely for legal reasons. New York wants money.
“Everybody down the food chain that uses our list has to buy our registry,” said C. Adrienne Rhodes, chairperson of the state’s consumer protection board.
And that is just one more headache for firms struggling to deal with a welter of conflicting state do-not-call laws.
Twenty states have enacted DNC bills, another eight are planning them and still others are considering them. But states with reselling rules like New York’s may cause the most trouble.
The two-page letter, signed by general counsel James F. Warden Jr. was first sent in August. It reads: “The New York State Consumer Protection Board has received information alleging that your firm may be engaged in reselling or redistributing information obtained from the Do Not Call Registry.” The letter then explains that an investigation has been opened. It also details the rules and includes a guide on the DNC law. Recipients have 10 days to respond.
It was not known at press time which firms had received the note. But the state has not yet taken action against any companies.
There are now 2 million New York residents on the state’s do-not-call list, but they pay nothing for the service. The state plans to support the program with the $500 annual fees it gets from sales of the registry.
That means it has to collect. “If we’re losing revenue, we have to find out why and where and do something about it,” said state spokesman Jon Sorensen.
How does it work?
A firm using a service bureau to scrub its files with the New York State DNC list is required to register with the state and pay the fee (as is the service bureau).
There is no requirement that companies register and use the file. But if a call is placed to a listed consumer, the telemarketer could be subject to fines of up to $2,000 per call.
New York plans to keep track of who uses the file, and will require service vendors to provide it with lists of clients so the state can verify those client names against its registration file, Rhodes said.
That does not bode well with some. “The people who have done legitimate outbound campaigns with a significant degree of sensitivity to their future customers are put at risk by sharing marketing strategy with a government entity,” said Sam Kades, senior vice president of call center services for The Martin Agency in Richmond, VA. “And it puts a great burden on that government entity to protect the information.”
Kades added, “I know they’re not thinking about the idea of competitive information.”
Meanwhile, some telemarketers and service bureaus have hired legal specialists to wade through the morass of regulations.
Each state has it own list of exemptions, release dates, formats for transferring the files, fees to consumers, and fees to businesses. Penalties range from fines in New York to jail time in Alaska.
Moreover, the registration forms can be detailed and extensive. Many states require a separate form be filed for each campaign. The Alaska form, for example, lists 18 questions, each with numerous subqueries.
“It’s a very difficult process to manage,” said Sheila Colclasure, business leader for privacy practices and solutions for Acxiom Corp. “There’s no consistency and it just sets [businesses] up for failure because it’s so difficult to manage.”
Adding to the confusion is the fact that some states allow the list to be shared while others — like New York — don’t. For example, Florida charges $30 per area code (there are 14 in the state), or $100 per quarter to obtain the file. But it allows reuse.
Vendors like Acxiom are trying to help clients cope with the New York law, and similar ones from states like Tennessee.
Acxiom first explains the requirements to its clients that want to telemarket in those states. Clients register with the state and pay the fee. The client signs a contract allowing Acxiom to act as its agent. Acxiom obtains the file, cleans the client’s list and houses the file for the client’s future use, Colclasure said.
Acxiom also maintains a database of all state DNC lists (where laws permit) and uses it to offer a scrubbing service for its clients. It spends $5,000 annually to obtain the various state lists, and in excess of $150,000 to internally process the files.
West Corp, San Antonio, spends between $3,000 and $5,000 just in registrations for the lists. “That doesn’t include processing costs,” said Michael Mazour, executive vice president for West Corp.
The challenge can be particularly tough for small businesses that may not have the technology or the staff to navigate the laws.
“These regulations really favor the larger companies who have the technology to deal with it,” said Dennis McGarry, president of Personal Legal Plans, which acquires most of its customers by telephone. The firm, which markets legal, tax and financial services is based in Charlotte, NC, and operates six outbound call centers in North Carolina and Georgia.
Some small companies may not comply with the laws because it would be cost prohibitive to do so, said McGarry, who is also the chair of the government affairs committee for the American Teleservices Association.
Meanwhile, the Federal Trade Commission plans this month to propose an amendment to the Telemarketing Sales Rule to develop a national DNC list, said Howard Beales, director of the FTC’s bureau of consumer protection. Public comment on the proposal will be taken for 60 to 90 days before the FTC makes a final determination whether to amend the rule. The rule would have the force of law behind it with violators subject to civil penalties of $11,000 per incident, Beales said.
It is unclear whether the Federal rule would supersede state law, and whether charities, politicians and others typically exempted from using DNC lists would have to comply.
“From a consumer’s perspective, we would like to see charities have to use the list,” Beales said.
The service would be made available to consumers nationwide free of charge through an 800 number and would also be free to telemarketers and others conducting telephonic campaigns. An electronic database would be made available to qualified marketers for specific uses.
The Direct Marketing Association plans to develop a service to help its members comply with the state DNC rules. However, the DMA was not ready to offer details until after Jan. 1, spokeswoman Amy Blankenship said. Three state lists — Connecticut, Maine and Wyoming — are included in the DMA’s Telephone Preference Service (TPS) file of just over 4 million names.
Does the country need additional state (and national) do-not-call lists?
Some sources say there are already plenty of rules in place to prevent consumers from getting unwanted phone solicitations including the federally governed Telephone Consumer Protection Act and the DMA’s TPS.
“State lists really only serve to duplicate what’s already been done, create more bureaucracy and cause an unnecessary administrative burden on businesses,” said Lauren Kallens, a spokeswoman for MCI, which operates 18 outbound call centers.
And many wonder whether some states are more interested in generating revenue than protecting consumer privacy.
“The intent of all of this was to try to help the consumer, not to be a big revenue generator for the state,” said one service bureau executive.
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