Telemarketing and the "Do Not Call" List

Businesses have always sought new ways to market their products to consumers. Using television and radio commercials, print advertisements, and billboards and signs, businesses have been able to draw attention to their goods and services. In some cases, marketers have taken an even more direct route, employing door-to-door sales and direct mailings to get to consumers.

In recent years, a new practice of direct marketing has risen in popularity among businesses: telemarketing. Telemarketing involves telephoning people, without advance notice, to make a sales pitch or solicit a donation. Frequently, the calls are made to people's residences at hours when they are expected to be home.

Although the telephone has long been used for marketing, telemarketing has experienced a surge in recent years. New telecommunications technologies and declining phone rates have made telemarketing an enticing option for businesses to reach consumers. The result has been a boom in an industry that now generates some $600 billion in annual sales and makes as many as 104 million calls a day.

However, as telemarketing has grown more popular among businesses, it has also begun to incur the wrath of consumers. Telemarketing has sparked an outcry from people who find the calls invasive and annoying. Complaints abound of family dinners or quiet weekends interrupted by telemarketers calling to peddle products to unwilling consumers.

In recent years, the growing complaints have evolved into a full-fledged public backlash. People have filed lawsuits, established public-interest groups and lobbied for tougher laws in an effort to stop the flood of unwanted telemarketing calls that citizens receive every year. Mounting public pressure has also pushed state governments to act. State legislatures have passed measures setting up "do not call" registries, intended to keep telemarketers from calling citizens who place their phone number on such lists. Currently, 27 states have set up their own registries.

In the past year, the federal government has also followed suit. The Federal Trade Commission (FTC) in late June 2003 launched a national "do not call" registry aimed at curbing unwanted telemarketing calls. The initiative requires telemarketers to stop placing sales calls to consumers who register for the list. Those who violated the rule could be penalized as much as $11,000 per infraction. According to some estimates, the registry would result in an 80% decrease in telemarketing calls.

The initiative proved to be immensely popular. Within hours of its unveiling, hundreds of thousands of citizens registered for the list via a toll-free telephone number (1-888-382-1222) or the Internet (www.donotcall.gov). By Oct. 1, the date when the list was scheduled to go into effect, more than 50 million people had registered their phone numbers. Polls have also shown enormous support for the registry.

The industry has responded decisively to the FTC's rule, fighting it in the courts. About a week before the list was to go into effect, a U.S. district judge in Oklahoma City, Okla. struck down the registry, saying the FTC did not have the authority to implement the list. The following day, swift congressional action granting that authority to the agency essentially overturned the ruling and seemed to put the registry back on track.

However, a new ruling, by a judge in Denver, Colo., derailed the list anew. In that case, the judge ruled that the list represented a violation of the First Amendment right to free speech, handing the telemarketing industry a victory. The FTC has since appealed the decision. Meanwhile, one of the two main telemarketing trade groups announced that it would ask its members to voluntarily abide by the FTC list, despite the still-undetermined legal status of the list.

As the government and the industry continue to battle it out in the courts, the issue of telemarketing has received enormous coverage in the media and sparked a debate. The dispute has focused in particular on the national "do not call" registry.

Supporters of a "do not call" registry say that the FTC registry is an effective tool that will help reduce, if not outright eliminate, unwanted calls by telemarketers to people's homes. They say that telemarketing calls, which have risen in recent years, are annoying and intrusive, and that government action is needed in light of the industry's unwillingness to heed consumers' wishes.

Countering critics' arguments, proponents contend that the government has the authority to establish the list to protect consumers. They dismiss industry claims that the registry infringes on telemarketers' free speech rights, saying that telemarketers do not have the right to disturb people in their homes.

Critics of the measure claim that public antipathy toward telemarketers has been overblown. They point out that telemarketers make billions of dollars in sales a year, meaning that there is a demand for their services. Moreover, detractors contend that preventing telemarketing calls is not the government's job. The registry, they claim, is an example of the government overstepping its authority in regulating commerce.

Many opponents agree with the finding by the court that the list represents a violation of the First Amendment because it gives the government control over what type of phone calls consumers should receive in their homes. Finally, telemarketing industry officials warn that the rule will cripple their industry and cause millions of people to lose their jobs.

Sources

"A New Internet Democracy?" Economist (July 24, 2003)

Banner, Stuart. "It Isn't So Easy to Put Those Marketers on Hold." Washington Post (October 5, 2003): B3.

Foley, Ryan. "Appeals Court Clears the FTC to Enforce Its Do-Not-Call List." Wall Street Journal (October 8, 2003) .