aKeeping an Eye on Outbound Calling

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For the past several years, this column has focused on six key legal/legislative issues affecting the teleservices industry.


As a reminder, the six are registration/bonding; calling time restrictions; ask permission; no rebuttals; do-not-call lists and writing requirements.


But recent legislative initiatives in Kansas and one that went down to the last day of the California legislative session have convinced me that we need to add a topic to the list: abandonment rates and the use of predictive dialers.


Public concern over abandonment rates has been around for the past couple of years. It reached such a serious level in 1999 that the two major trade associations for the teleservices industry, the American Teleservices Association and the Direct Marketing Association, issued position papers regarding the use of predictive dialers.


Though the two associations differed in their approach to addressing these concerns, both associations sent a clear message to their members that the irresponsible use of dialers and the relevant technology was unacceptable.


Though it was an important step for the industry leaders to take in showing their commitment to the responsible use of equipment, I am not sure the problem is as widespread as some people think. Sure, there are companies with their dialers cranked up to an unacceptably high rate of abandonment. My guess is that those are the same companies that give the industry a black eye on nearly all legal compliance fronts.


They do not provide sufficient disclosures in their pitches. They do not adequately maintain do-not-call lists. They misrepresent the nature of the goods and services they offer. They are the "damn-the-torpedoes, full-speed-ahead" segment of the industry that could care less about the consequences of their actions as long as they can squeeze a few dollars out of the public.


In short, these are the companies that wind up on ABC's "20/20" and NBC's "Dateline" every year. However, these companies account for a miniscule, nearly insignificant percentage of telemarketing calls placed each year.


That these companies exist at all, however, has raised this debate to the legislative level. Kansas and California introduced legislation in 2000 aimed at eliminating abandonment by predictive dialers.


The Kansas legislation, which passed and took effect June 1, requires that either a "live" operator or a recorded message be available within five seconds of the call's connection with a Kansas consumer. Technically, this new statute prohibits abandoned calls.


The key is that you may use a recorded message to inform the consumer that the call will be answered by an available operator and provide any other information that will make appropriate disclosures to the consumer regarding the company on whose behalf the call is being made. Or the message may give the required disclosures and let the consumer know that you will call them back or where they can call you back. Regardless of the message, it still allows some flexibility to use the dialer in a predictive environment.


The California legislation was more troublesome. It would have required a "live" operator to be available for every call placed to California consumers.


The use of a recorded message was only available if the call was for a limited number of noncommercial purposes. Otherwise, the company placing the call would have been required to provide a single operator for every single call placed by the dialer. That would negate the purpose of the "predictive" dialer and render it nothing more than an "automatic" dialer that only dials a number when prompted by an available telephone representative.


This bill failed to pass the California Legislature on the final day of the 2000 session, but you could get good odds in Las Vegas that this idea will resurface in 2001.


Like most regulatory issues affecting this industry, opinion on these bills is all over the map. Some in the industry support the idea of a "zero" abandonment rate requirement. They argue that each and every contact is an important sales (or other) opportunity and companies should not needlessly anger their potential customers by hanging up on them. Others think an effective and efficient calling campaign must include some nominal number of disconnects.


There are valid arguments for all points of view, except those who believe in an abandonment rate that has no corresponding efficiency benefits.


The only purpose of this article is to place the issue of abandonment rates into the ongoing industrywide debate regarding the future of outbound calling. Those of you who actively follow the legislative initiatives that are proposed at the state level should pay special attention to this one, as it is an idea that likely will be seen in greater numbers next year.


C. Tyler Prochnow is an attorney at Lathrop & Gage, Kansas City, MO, where he specializes in teleservices law.

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