Telemarketer Fight a Real Call to Arms
Gerry Standefer could be Exhibit A for why many Californians dearly want a way to block intrusions from pesky telemarketers.
Each weekday evening for about four months, Standefer’s phone would ring, bringing unwanted solicitations for Internet service from America Online Inc. telemarketers.
Nothing the San Bernardino County chef said or did could make the telemarketers stop.
He told them he no longer owned a computer and they called back. He threatened to sue and they called back. He sent a registered letter to AOL’s chief executive and they called back.
A bill being considered by California legislators would give people like Standefer what advocates portray as the ultimate recourse: By signing up for a blanket do-not-call list, consumers could prevent all but nonprofits, political groups and businesses with whom they have established relationships from soliciting them by phone.
The measure has uncorked a fierce lobbying donnybrook pitting telemarketers, newspapers and long-distance providers against privacy advocates and companies that hold dominant market positions in California and see the bill as a way to keep them.
Yet there is plenty of doubt that a no-call list could provide the relief it promises. Though wildly popular in other states, the lists have proven far from airtight and violating them often carries only mild penalties.
Telemarketing has garnered so much attention because it is big business--and perhaps the most intense expression of the love-hate relationship people have with their phones.
Americans made a record $612 billion in purchases over the phone last year, $257 billion spent by consumers and the remainder by businesses, the Direct Marketing Assn. says. The telemarketing industry employs 5.7 million people nationally, including half a million in California, and expects its ranks to grow to 6.9 million by 2005.
But its success depends on relentless--some would say infernal--persistence.
According to AARP, Americans receive about 19 billion unsolicited sales calls a month as amped-up competition has sent industry after industry--from financial services to cable companies to phone service--dialing for dollars. A small fraction of calls connect, sometimes as few as 10%, and an even smaller fraction of those produce sales.
California’s effort to rein in this industry comes amid a wave of pro-privacy measures. State legislators and Gov. Gray Davis have put forward several proposals aimed at limiting financial institutions’ ability to sell or share clients’ personal information.
The no-call bill targets yet another area where consumers feel under siege.
Federal ‘Do Not Call’ Law Has Had Little Effect
A 1991 federal law allowing consumers to request that individual companies place them on their do-not-call lists has provided little respite from the nonstop offers. Many consumers do not know their rights, and no matter how many telemarketers they reject, there are always more.
Rising consumer ire has prompted 24 states to pass legislation similar to California’s proposed law, a piecemeal solution that has business groups grumbling.
Florida established the first state-run “do not call” list in 1990, spurred by elderly consumers besieged by both legitimate and bogus solicitations. More than 140,000 residents signed up, paying $10 to get on the list and an annual $5 renewal fee, but there are mixed signals about its efficacy.
“People tell us 80% to 90% of the calls are weeded out,” said Terry McElroy, spokesman for the Florida Department of Agriculture and Consumer Services. Yet Florida consumers still file 8,000 to 10,000 complaints about telemarketing each year, as well as an additional 5,000 to 6,000 gripes about “do not call” list violations, McElroy acknowledged.
A tiny trickle of states followed Florida’s lead by enacting no-call measures in the mid-1990s, but the floodgates really opened in the last three years.
The lists’ popularity has far outpaced expectations, especially in states where it is free to enroll.
Missouri expected about 200,000 residents to sign up, but got more than 800,000 in just a few months. New York’s list, begun in April, already has 1.8 million names on it and has elicited a cascade of thank-you notes and e-mails.
“It’s an empowering thing,” said Jon Sorensen, spokesman for the New York State Consumer Protection Board.
Nationally, about 5 million households are on do-not-call lists, but that figure probably would jump by more than 50% if California joined the ranks--one reason the battle has been particularly fierce here.
The bill’s author, state Sen. Liz Figueroa (D-Fremont), had espoused a no-call list in 1999, but ran into a stone wall in the person of powerful Senate Leader John L. Burton (D-San Francisco).
Burton’s mother had once supported his family by making phone solicitations for their archdiocese and, after a tongue-lashing from his brother, he was determined to safeguard the jobs the industry provides for those with limited skills.
“I remember vividly my brother chewing me out,” Burton said. “She was putting my old man through medical school and feeding three kids.”
But two years later, even Burton had had it. “I must get five or six calls a day,” he said. “It’s a fabulous intrusion.”
The worst, he said, are the calls made using predictive dialers, which ring four or more people at once. The technology helps phone solicitors bypass answering machines and busy signals, but if people on two different numbers pick up, one may be greeted by silence as the telemarketer speaks to the other.
A separate bill, already passed by the California Assembly, would limit the use of predictive dialer machines.
Even with Burton as a co-author, Figueroa’s do-not-call list bill has faced a gantlet of opposition. Ensuring its survival has meant racing lobbyists down Capitol corridors, prying colleagues out of closed-door meetings and even confronting the reluctant governor at a barbecue.
Telemarketing industry groups have attacked the measure as an unnecessary duplication of federal protections
The California Newspaper Publishers Assn., of which the Los Angeles Times is a member, has argued that the legislation would hurt circulation. The Newspaper Assn. of America reports that phone solicitations account for 58% of new subscribers generated by marketing programs.
“The bill threatens the vitality of California newspapers as they vie against other media for a share of the highly competitive marketplace,” the California Newspaper Publishers Assn. complained in a recent letter to Figueroa.
Figueroa fended off more objections from small-business groups and real-estate agents by adding an exemption for neighborhood firms with five or fewer employees.
The most resistance, however, has come from long-distance phone companies, which feared that dominant local provider Pacific Bell would prod customers to join the list, then have an exclusive opportunity based on its existing relationships to sell them long-distance and high-speed Internet services.
Pac Bell endorses the legislation but not for competitive reasons, spokesman Michael Heenan said. He criticized Pac Bell’s rivals for both their political tactics and their sales tactics.
Long-distance carriers have become “the renowned interrupters of American dinnertime,” he said. “This is really about them wanting unfettered access to consumers.”
Nevertheless, late last week, long-distance carriers wrung out two concessions: a 30-day window to call customers who have switched to competitors to verify their intentions, and language that prohibits incumbent providers from urging subscribers to join the don’t-call list.
“We still don’t like the bill, but at least they’ve taken out some of the anti-competitive elements,” AT&T; Corp. spokesman Gordon Diamond said.
There are no data to document how telemarketing call volume changes when states install do-not-call lists.
Enforcement Key to Lists’ Effectiveness
For-profit companies subject to such measures make a large majority of the calls, according to Direct Marketing Assn. research: They accounted for about 80% of consumer phone sales and about 64% of consumer-sector telemarketing jobs in 1999.
Nevertheless, industry officials say exemptions eat away at the lists’ effectiveness, as do calls from illicit telemarketing boiler rooms. Kentucky’s law, for example, is weakened by some 22 loopholes, including one that effectively grandfathers in any merchants selling consumer goods in the state for at least two years.
“The bills are portrayed as ‘I will save you from telemarketers,’ ” said Matt Mattingley, director of government affairs for the American Teleservices Assn. “It’s not true. You have so many exemptions, consumers are not going to notice a difference in the number of calls.”
The lists’ effectiveness also may ride on enforcement, which has differed in its intensity from state to state.
Florida, for example, has never sued a telemarketer for violating its do-not-call list, preferring to pursue negotiated settlements.
Missouri, by contrast, came out with enforcement guns blazing since enacting its law last year. Its attorney general’s office is investigating more than 1,800 purported violations, and it prosecuted self-styled psychic Miss Cleo, winning a $75,000 forfeiture.
Under the California bill, enforcement would fall to the attorney general’s office, which could impose $500 fines for first violations and $1,000 for subsequent ones.
Ideally, savvy telemarketers would not challenge the measure, but would regard it as an efficient way to cull unreceptive consumers from call rosters, industry experts say.
“By the time a person puts their name on that list, they’re not willing to purchase anything from anybody,” said Keith Fotta, chief executive of Gryphon Networks, a Massachusetts company that sells software to telemarketers that blocks numbers on no-call lists. “It is purely a waste of the industry’s effort to call someone like that.”
Regardless of whether the measure dramatically alters how many calls consumers receive at home, it may at least prevent telemarketers from expanding the onslaught to cellular phones, a growing concern among consumer groups.
The California bill would be the nation’s first to prohibit phone solicitations to cell phones. Telemarketing industry leaders say such a restriction would be moot, since reputable firms wouldn’t risk their reputations by forcing consumers to pay for incoming sales pitches.
If the bill clears its final hurdles this week, consumer advocates hope that the actions of the nation’s biggest state echo in Washington.
“If California passes this law, the feds are going to have to take notice that their bills are weak to the point of being worthless,” said Beth Givens, director of the Privacy Rights Clearinghouse in San Diego. “There needs to be a single, nationwide list.”
Gerry Standefer could not wait for the Legislature’s help to quiet the endless jangling of his phone. Tortured by what he described as hourly calls from AOL, he used the federal do-not-call law to sue the company in small-claims court. After a judge turned down the company’s motion to move the case from San Bernardino County to its home base in Virginia, AOL did not contest his claim.
A copy of the company’s check, for $5,000 plus $26 in court costs, hangs on his wall in the small town of Mentone. Though he won in the end, he said he would prefer to join a do-not-call list rather than fending off telemarketers one by one.
“I’d sign up in a heartbeat,” he said.
