FTC Mulls Predictive Dialer Ban, Catches Industry by Surprise

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Amid the focus on the Federal Trade Commission's proposed national do-not-call list, telemarketers potentially face an even more dangerous proposal that would ban the use of predictive dialers.


One proposal announced by the commission when it unveiled the DNC list plan was a clarification of the Telemarketing Sales Rule to specify that "dead air" constitutes a violation. Dead air can occur when predictive dialers make calls but don't immediately connect the consumer to a telephone agent.


If no agent is available, a hang-up or abandoned call can occur, an event that many consumers find frustrating or even scary. More commonly, consumers experience dead air as the delay between the time they pick up the phone and the telephone agent's response.


The delay occurs because telemarketers program it into their dialers in order to weed out answering machines. The predictive dialer ensures that agents always speak to live consumers.


The use of predictive dialers dramatically increases call center efficiency, said Sandy Pernick, president of S. Pernick & Assoc., a Chicago-based teleservices consulting firm. A ban on predictive dialers would make many telemarketing campaigns unfeasible, and jobs would be lost.


"The industry is allowing the public to see this as a nuisance issue, not as a commerce issue," Pernick said. "I can't believe that getting a call during dinner is as dangerous for the country as losing 3 million jobs."


In its 150-page report on proposed revisions to the TSR, the FTC states that when dead air or abandoned calls occur, telemarketers fail to give required disclosures "promptly." Disclosures include the identity of the caller and the purpose of the call. The FTC further clarifies that "promptly" is defined as "at the onset of the call." Thus, abandoned and dead-air calls violate the TSR by default.


The FTC's statement does say the agency is willing to consider alternatives to a flat ban on predictive dialers, such as mandating a maximum abandonment rate or limiting the use of predictive dialers to telemarketers who have the capability to always allow their caller ID information to be displayed. However, most telemarketers agree that setting abandonment rates too low effectively negates any productivity benefits obtained by using predictive dialers.


Unlike the announcement of the national DNC list, which the industry had anticipated, industry advocates had not expected the FTC to come out with such a statement on predictive dialers. Not only is the FTC saying that dead air will be a violation in the future, but the agency is claiming that dead air and abandoned calls have been a violation all along.


"We've had discussions with the FTC over dead air and predictive dialers over the last three years," said C. Tyler Prochnow, state legislative counsel for the American Teleservices Association. "Never once has it been mentioned that dead air is a violation of the TSR."


Prochnow said the FTC's proposal could end the use of predictive dialers. Most industry experts agree that the predictive dialer is the most important technological advance in telemarketing in the past decade.


Despite the apparent gravity of the FTC proposals, the industry overall is still forming a response. The Magazine Publishers of America and the Newspaper Association of America said they are reviewing the proposal and will submit comments to the FTC by the end of March, the deadline for submissions of written comments on the proposals.


Several industry organizations, including the Direct Marketing Association, the ATA, MPA and Electronic Retailing Association, will meet Tuesday to develop a cohesive plan for responding to the proposal. As of yet, they have not arranged a formal coalition.


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