DNC List Cuts Jobs, Profits — and Annoyance

For A Direct Result Inc., Baltimore, a small outbound teleservices agency that generates mortgage applications, the past year has been a struggle against declining response and profits.

The agency's response totals have fallen from an average of 400 per week to less than 300 since the advent of the national do-not-call registry. Veteran calling agents have left because of declining commissions, and the company's profit is down 66 percent since August 2003.

According to the federal regulators who implemented the list, one silver lining for telemarketers was that after the list took effect only consumers who wanted to receive telemarketing offers would be left. That theory has proven hollow, said Lisa Scheuerman, A Direct Result's founder. She estimates that of all the consumers who submitted applications as a result of the company's calling in the past year and a half, 60 percent are now on the no-call list.

“Every month it's grown,” she said. “We might pick up an application from somebody this month, and next month they're on the DNC list.”

No studies of the list's economic effect have been conducted. Unscientific surveys of news reports of layoffs blamed on the registry have revealed job-loss numbers in the thousands.

“All of this information is completely anecdotal,” said Tim Searcy, CEO of the American Teleservices Association. “It's hard for us to make the case because it's a completely hidden damage.”

Telemarketers say the increasing cost of compliance and risk of violation have encouraged the trend of call center placement outside the United States. Going offshore isn't a refuge from U.S. telemarketing laws, and some still have reservations about going offshore to conduct outbound telemarketing, but many see offshore cost savings as the only way to keep their outbound programs viable.

The mainstream press has reported call center closures — some blamed on the no-call list — by major companies since the list took effect a year ago. However, the hardest-hit members of the industry have been small and midsized teleservices providers whose losses go mostly unreported. Their hardships generally fall on deaf ears among consumers. By all measures, the no-call list has been an unqualified success and is the FTC's most popular consumer protection program.

There are 64 million telephone numbers registered to the list. Before the list's launch, the FTC predicted that 60 million numbers would be registered out of 166 million residential phone lines. The FTC also predicted that the no-call list would block 80 percent of telemarketing calls to people who signed up. Consumers have reported anecdotally that calls have decreased significantly, said Sally Hurme, an attorney for consumer protection at AARP.

“The consumers want the choice,” Hurme said. “They want to control the use of their telephone.”

Even in areas where the no-call list demonstrably affected jobs, little public sentiment against it exists. Evan Barrett, director of Local Development Corp., Butte, MT, said he is on the list, as are members of his board of directors, despite the area having had two companies depart a call center facility in the town within a year.

Teleperformance USA laid off 100 workers in Butte in October 2003, citing the no-call list for lost business. Talk America, Reston, VA, a telecom, arrived four months ago but closed at the end of August, cutting 64 workers, because it switched to other marketing channels, Barrett said.

Butte, which has a 17,000-strong labor force, isn't throwing tax incentives and money at call center companies to locate in town.

“The quality of the jobs is sometimes marginal, sometimes moderate,” Barrett said. “We tend to invest ourselves in jobs with higher pay.”

What happened to the teleservices industry is similar to what happened in other industries — for example, copper mining — when market forces caused changes and forced business to adapt, Barrett said. The difference here is that the change came from government regulation.

“What it did was modify the market,” he said. “These types of things happen.”

The struggle to stay afloat continues. In September, A Direct Result stopped its policy of charging clients based on results — the number of applications it generated — and started charging by the hour. The change was necessary to keep the company in business, said Scheuerman, who works overtime to get more applications for her clients.

“I feel bad about that productivity level,” said Scheuerman, who takes encouragement from having survived a full year of the no-call list. “Some days I was ready to throw in the towel. Then you just get back up and try again.”

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