Consumers to Get Protection From Telemarketers
Federal regulators on Wednesday gave consumers new power to make their homes off limits to telephone solicitors offering home improvements, magazine subscriptions and other pitches.
The federal government already bars telemarketing calls before 9 a.m. and after 8 p.m. But the Federal Trade Commission on Wednesday announced fines of up to $11,000 any time a telemarketer calls a consumer who lists his or her phone number in a “do-not-call” registry to be set up by the FTC.
The agency also said it would crack down on unauthorized billing by telemarketers and require telemarketers to transmit caller-ID information, so that consumers who subscribe to caller-ID services will know who is calling.
The agency has asked Congress for $16 million to start the registry and for the authority to collect fees from telemarketers to finance it.
As the proliferation of low-cost marketing tools has stripped away the sanctuary that Americans once enjoyed at home, consumer outrage over telephone solicitations has grown. Marketers now use banks of computers to make more than 100 million calls a day, experts say. The calls often come at dinnertime and are frequently from companies that consumers are already doing business with, seeking to get their customers to sign up for new services.
In response, California and nearly 30 other states have enacted laws to restrict telemarketing. When the FTC sought public opinion on the issue this year, it received 64,000 comments -- most from consumers angry about unsolicited calls.
“They hate the interruption and intrusion,” said Allen Hile, assistant director of the FTC’s bureau of consumer protection. “It’s in your face and in your home.”
Proposed in January by FTC Chairman Timothy J. Muris, the telemarketing reform plan modifies a 1995 rule requiring telemarketers to honor a consumer’s request not to call again. Once the registry is funded, the FTC plans to set up a Web site and a toll-free number to enable consumers to register their phone numbers. Registration will be free and will last for five years, at which time it could be renewed. Telemarketers will have to check the federal do-not-call list every three months and will be fined if they call any- one on it.
By the time the registry is in place, however, telemarketing could be under greater siege. That’s because the Federal Communications Commission, which has greater regulatory authority over telephones than the FTC, is expected early next year to outline its own crackdown on unsolicited calls.
California’s do-not-call law, which was passed last year and imposes fines of up to $1,000 per violation, will become effective next month unless the FCC comes up with its own plan.
Direct marketers have opposed the rules as unnecessary in an age when telephones have caller ID, answering machines and other devices to intercept unwanted calls.
They also say the FTC’s rule will create unrealistic expectations, since the agency does not have jurisdiction to regulate telemarketing by airlines, telephone companies, banks and some insurance companies. Consumers will continue to get calls from these companies, if the companies make the calls directly rather than contract them out, as well as from marketers -- such as many newspapers -- that make calls only within the states in which they are located. Charitable and political solicitations are also exempt from the FTC rule.
“These new rules don’t touch the three major users of telemarketers: telephone companies, financial institutions and nonprofit groups,” said Ian D. Volner, a Washington lawyer for the Direct Marketing Assn., a New York-based trade organization. “But they will have significant adverse effects [on other marketers] and will drive up the price of products due to the cost of compliance.”
Consumer groups and some lawmakers praised the measures as long overdue.
“We applaud the FTC moving to crack down on this abusive interference with consumers’ privacy,” said Gene Kimmelman, co-director of the Washington office of Consumers Union. “My hope is that the FCC will work closely with the FTC to make sure they initiate a common process and procedure for consumers to block telemarketing calls.”
Because of its wider jurisdiction over communications, any FCC action is likely to cover all telemarketing activities, including those by telephone companies, banks and nonprofit groups.
Rep. Edward J. Markey (D-Mass.) said the FTC’s new rules are “a giant step forward for consumers who are often plagued by unwanted, intrusive unsolicited telemarketing.”
*
Preliminary information on the FTC rules is available at www.ftc.gov/donotcall.
