November 2002 Mfg.Trust

Mfg.Trust is a monthly feature of the
            NCMS InfraGard Manufacturing Industry Association
                        Infrastructure assurance for manufacturers
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This month – Telemarketing

Do-Not-Call Laws – A New National Trend

Accompanying Resource Page for this Story 

Editor's Preface:

This month's feature addresses yet another aspect of privacy, telemarketing and new trends in "Do-Not-Call" Laws, a phenomenon that began in the early '90s that now encompasses 75 percent of the consumer population.

Our guest author this month, Keith Fotta, is a widely published expert on this topic. Keith is President and CEO of Gryphon Networks, Corp. which provides automated Do-Not-Call compliance solutions.

Please be sure to check the Resources page that accompanies this article. You will find trend maps and a list of states with "Do-Not-Call" laws. The resources page is at http://trust.ncms.org, under the Publications Index tab.

John Sheridan (johns@ncms.org)

TELEMARKETING

Do-Not-Call Laws – A New National Trend

BY KEITH FOTTA, President & CEO, Gryphon Networks

Recently, the telemarketing industry has received an overwhelming amount of attention from industry leaders and experts, state officials and legislators.  This increased awareness has been fueled largely by the growing trend of state Do-Not-Call laws and the existing proposal for a national Do-Not-Call list.

Last year, sales from outbound telemarketing grew to $660 billion, continuing to prove that telemarketing is an effective method of selling products and/or services to consumers.  But over the past few years the industry has been facing some new challenges.  In the last four years states with Do-Not-Call laws have grown from 2 to 32 – these laws limit when and to whom calls can be made and assesses penalties to violators.  In the first half of 2002, seven states passed Do-Not-Call laws:  Massachusetts, Illinois, Vermont, Kansas, Minnesota, Oklahoma and Pennsylvania.  It is estimated that by the end of 2002 35 states will have state Do-Not-Call lists in effect.

Current Trends in Do-Not-Call Laws

Currently, state Do-Not-Call laws cover approximately 75 percent of the consumer population.  This past summer several states activated their sign-up periods and received an incredible number of responses from consumers.  When Pennsylvania announced the start of their sign-up period after three weeks more than 1.1 million consumers overwhelmed the phone lines and Internet site to register.  Colorado also had a busy first sign-up period and recently published their first list of 740,000 phone numbers.  Recently, a total of five states topped the 1 million mark.    

Not only are there more Do-Not-Call laws, but the laws themselves are becoming increasingly complicated and penalties are greater than before.  Along with restricting calling hours some states have considered additional “dinner hour bills” that would ban telemarketers from calling during the typical family dinner hours, as in the case in Tennessee.  In March, Kentucky revised their original Do-Not-Call law and reduced the original 20 exemptions down to five and legislators made the third violation of the state Do-Not-Call law a felony charge.  To keep up with rising state administrative costs New York raised their fine from $2,000 to $5,000 per violation, which is still lower than average when compared to Oregon’s penalty of $25,000 per infraction.  

Across the U.S. both large and small entities are affected by these laws, from local landscaping companies to Fortune 500 financial institutions.  Do-Not-Call law violators have attracted national attention over the last six months in various states including:  Missouri, Oregon, New York, Indiana, Tennessee, Kentucky and Louisiana.  For example, since Missouri’s law went into effect last year the Attorney General’s office has collected $610,000 in fines.  Oregon has collected $450,000 in fines and New York has collected $435,910 thus far.  

Telemarketing Legislation

Do-Not-Call legislation is a phenomenon that began in the early '90s with several federal laws (the Telephone Consumer Protection Act (TCPA) and Telemarketing Sales Rule (TSR)) that required companies to keep a list of consumers who requested no further contact, instituted a telemarketing curfew from 9 p.m. to 8 a.m. and set the fines of up to $11,000 per infraction.  The Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 (TCFAPA) granted the Federal Trade Commission (FTC) the authority to enforce these laws.  Also, the FTC has the authority to seize phone records - which can be extremely troublesome, since these records could potentially reveal further violations beyond the complaints being investigated.

In January 2002, the FTC proposed several amendments to the Telemarketing Sales Rule.  One includes the creation of a national Do-Not-Call list for which consumers could register.  It is important to note that the FTC only has jurisdiction over inter-state calling, not intra-state calling.  More information will be available in the upcoming weeks regarding the status of a national registry along with additional details of how such a registry would be created and managed.

Industry Response

During this flurry of state and federal activity industry experts and associations have expressed their concern for the effect these laws have on the different vertical markets that use telemarketing. Several trade associations believe these existing regulations are already difficult to comply with so why pass additional legislation?

In an article from the Patriot-News (Harrisburg, PA) dated August 11, 2002 the American Teleservices Association (ATA) expressed opposition to any rules stating that the multiplying state codes, combined with the federal laws, create a patchwork of rules for which it would be difficult for telemarketers to comply.  In a press release in January 2002 the ATA contends that, “the 20 states with such laws have created an administrative nightmare for companies simply attempting to comply with the law.”

Also the leading trade association for direct marketers, the Direct Marketing Association (DMA) has expressed many of the same concerns.  In a press release dated May 28, 2002 the DMA states, “to propose such measures - especially this late in the process - is not only counterproductive to our own industry’s self-regulation efforts, but also creates a huge financial burden for marketers who work industriously to honor consumers’ privacy preferences.”

What many associations and industry experts have not fully researched and embraced is technology.  Technologies are available to companies using telemarketing that solve many of the regulatory issues and problems.  The growing compliance industry offers automated systems that recognize Do-Not-Call phone numbers and can also provide instant compliance if a consumer requests to be on a Do-Not-Call list.  New cost-effective systems can be customized to the exact size of an office, number of agents employed and how many calls a company makes. 

Furthermore, Do-Not-Call lists make telemarketers more productive and efficient because they are not contacting consumers that are unreceptive to telemarketing.  Coupled with compliance technologies, companies are fully compliant with all the laws and targeting the right people at the right time.

About the Author:

Keith Fotta is the president and CEO of Gryphon Networks, Corp. the leader in automated Do-Not-Call compliance solutions. Gryphon’s proven, patented technology enables outbound telephone marketers to automatically manage compliance with all state and federal consumer Do-Not-Call laws. The network-delivered technology provides nationwide, multi-site, professionally managed Do-Not-Call compliance protection in real time. Powerful call accounting and agent productivity reports for all calling locations are instantly accessible via the World Wide Web.  Founded in 1995, Gryphon Networks is a privately held company headquartered in Norwood, Massachusetts.  For more information contact Gryphon Networks at 781.255.0444 or visit www.gryphonnetworks.com.

LINKS:

Gryphon Networks Professionally managed Do-Not-Call compliance protection in real time http://www.gryphonnetworks.com

Direct Marketing Association State Do Not Call Lists
http://www.the-dma.org/government/donotcalllists.shtml

American Teleservices Association Association dedicated to the teleservices industry www.ataconnect.org

Federal Trade Commission Proposed Do-Not-Call Registry Web Site http://www.ftc.gov/bcp/conline/edcams/donotcall/index.html

Federal Communications Commission Consumer & Governmental Affairs Bureau
http://www.fcc.gov/cgb/

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