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The Do-Not-Call Follies

I have been amused by the ongoing battles over telemarketing and the do-not-call rules of the Federal Trade Commission and Federal Communications Commission. The stupidity and hypocrisy displayed by all sides are pretty close to the top of the scale, and I’m already using a Washington scale, which allows lots of room at the top.

Let’s begin with the litigation over the FTC’s rule. I don’t begrudge anyone the right to litigate to protect a vital interest. The companies and trade associations fighting the no-call rule are welcome to their day in court. However, their tactics and legal strategy certainly can be questioned.

The telemarketing industry has respectable constitutional arguments about no-call lists. I don’t buy the arguments, but they aren’t the issue today. Much more amusing is the litigation brought by the Direct Marketing Association questioning the statutory authority of the FTC to issue the do-not-call rule.

As everyone knows, the DMA won its argument before the District Court in Western Oklahoma. Winning an argument doesn’t mean that the strategy is necessarily right, however. Everyone also knows that the court’s decision was overturned immediately by a new statute enacted by Congress in record time and signed right away by the president.

A Pyrrhic victory is a victory so costly that it is hard to distinguish the winning side from the losing. The DMA didn’t even win a Pyrrhic victory. Telemarketers got slaughtered because of the decision. The lawsuit was a bump in the road to a predictable but still impressive congressional response.

Politicians see the same public opinion polls that the industry sees, and everyone knows that the public hates telemarketers. That is why the legislation passed so easily and so quickly. Congress can act expeditiously when a consensus exists. Telemarketers are without political defenses in this environment.

So the litigation resulted in the strongest possible demonstration of public and political antipathy toward telemarketers. Is that what the industry wanted to have in the background as it fights a constitutional battle that could come out either way? Finley Peter Dunne’s Mr. Dooley told us more than 100 years ago that the Supreme Court follows the election returns. The speed and clarity of the congressional action will do nicely as a proxy for actual returns. The industry couldn’t have put itself in a worse position if it tried.

Let me add a word about the American Teleservices Association’s estimate that the no-call list would result in the loss of 2 million jobs. Evidence is already piling up showing that the estimate was more industry hysteria. The estimates will come back to haunt the ATA.

Then we have the FCC. After years of ignoring the do-not-call provisions of the Telephone Consumer Protection Act, the FCC suddenly decided that it wanted to be a player and reconsidered its 1992 decision not to have a national no-call list. Why did the FCC act now? Because it didn’t want the FTC to have all the press. Even so, the FCC had to complicate matters considerably by writing a slightly different rule.

Meanwhile, let’s not forget the FTC. In the rush of litigation, legislation and hoopla surrounding the do-not-call follies, one major point has been overlooked by nearly everyone. The FTC’s basic no-call rule isn’t very helpful to consumers because it is riddled with loopholes. I don’t expect most readers of DM News to agree with that characterization, but you are likely to agree that the rule does little to stop the ability of many companies to telemarket.

The rule lets a company call customers based on a prior business relationship for up to 18 months after the completion of the last transaction. For example, a magazine publisher can call subscribers to sell any of its other magazines for the life of the subscription plus 18 months.

How many companies does the average person have continuing relationships with? A short list would include one or more telephone companies, banks, credit card issuers, insurance companies, supermarkets, drugstores, cable TV providers, Internet providers, utilities, brokers, lenders and airlines. A complete list of routine consumer activities that could trigger a telemarketing call notwithstanding the DNC list could go on for pages.

That loophole wasn’t enough for the FTC, so it created another. If an individual merely makes an inquiry of a merchant, the merchant can call the individual for three months. What is an inquiry? Clicking on a Web site? Calling to see whether a store is open? Beats me. The rule has no definition.

Even if the FTC’s do-not-call list and rule are upheld finally by the courts, it won’t take long before the volume of telemarketing calls returns to previous levels. Changes in the nature and source of the calls will result, but companies will find a way to run after telemarketing dollars. Telemarketers will pour through existing loopholes and through new ones yet to be devised. The “contest” loophole is already being exploited. When someone fills out a form to enter a contest, the entry is taken to be authority to make calls.

I can’t tell you what will happen in the end with the litigation. I can, however, predict with confidence that stupidity and hypocrisy about telemarketing will continue at their traditional elevated levels.

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