The Wrong Fight
The Federal Trade Commission has many challenges. The last thing it needs is the burden of making a telephone preference service work.
Yet here we have consumer protection director Howard Beales announcing a revised Telemarketing Sales Rule that would include a national opt-out number. This will duplicate the efforts of many states and the Direct Marketing Association, which seems to go against the conservative nature of the current FTC. And it will differ from the DMA system in that it will include monetary penalties for non-compliance (which in many cases is accidental).
Our industry will not take this lying down. In fact, the DMA has already fired its first salvo — it has started a telemarketing ethics operating committee that will focus on the issues that drive consumers batty.
And what is my advice as a loyal adviser to the industry and a believer in commercial free speech?
Give it up, because this is one fight we are going to lose.
Why do I feel this way? I have spent 13 years handling tough consumer issues, but none has been as stubborn and enduring as telemarketing.
On the one hand, telemarketing works. The proof is in the 6 million employees who generate $600 billion in annual revenue.
At the same time, nine out of 10 Americans find telemarketing to be intrusive. Thus, we have a marketing mechanism that works while also being perceived as being obnoxious.
What’s the problem? As one of my colleagues so eloquently stated, it is about “five calls a night, all while I am putting my children to bed.” And I agree. While I was thinking about this column, I received a call from Eckard Investments. I said I don’t take telemarketing calls. He said, “I’m not a marketer, I’m a broker — don’t hang up.” Yes, a broker making a cold call to attempt to sell me an investment. Quacks like a duck.
And consumer frustration has gotten worse, for technology has made telemarketing more efficient, but also more intrusive. For example, predictive dialers have made each salesperson more productive, generating more sales per call. But the same process results in many calls from “unavailable” that result in dead air and a hang-up.
This frightens the elderly and those living alone. And makes me feel stupid as I say, “Hello, hello, is anyone there?” Predictive dialers have led to rapid growth in Telephone Preference Service membership and an acceleration in state-run do-not-call lists.
Predictive dialing technology was first used by the collections industry, where each contact is golden. But direct marketing and collections are two different things, and we DMers have yet to find a self-regulatory solution to the problem of abandoned calls.
Privacy specialists tell me that the two biggest drivers of consumer privacy angst are telemarketing and ID theft. They add that if telemarketing abuses were to disappear tomorrow much of the consumer-driven privacy pressure would disappear as well. Many — in private — say it’s time to give Americans control over their telephones.
Are there legitimate criticisms of the FTC proposal? Absolutely. But they center on the belief that the FTC will be no more effective than the DMA and the states in getting rid of unwanted calls.
The FTC revisions will not limit calls from charities or political campaigns. They will not limit calls from industries not covered by the FTC (like telecommunications and financial services). The FTC will not be better equipped to deal with the shortcomings related to telephone number-based pander files, and it runs the risk of disappointing consumers yet again. The commission will learn how difficult it is to manage complex databases.
As I said, this FTC initiative is no place to make our stand on freedom of commercial expression. That fight is too important, and we should make it where we have a greater chance of success. Yes, we should be free to deliver our commercial messages. And individual consumers should have an effective means to limit messages that they find intrusive and obnoxious. The right to advertise in a targeted fashion is the most important issue facing our industry. Binding it to who should manage an opt-out system dilutes its importance.
MARTY ABRAMS is executive director of the Center for Information Policy Leadership at Hunton & Williams, Atlanta.
