Video: Telemarketers find ways around law

By Bob Sullivan Technology correspondent
msnbc.com
updated 4/14/2004 7:23:31 PM ET 2004-04-14T23:23:31

It sounds like every other sweepstakes entry you've seen, but in the age of the Do Not Call list there's a twist.

The Ecology First Sweepstakes' "$25,000 cash or car giveaway" comes with this catch in the small print: "By completing this form, you agree that sponsors and co-sponsors of this sweepstakes may telephone you, even if your number is found on a do not call registry or list."

The company which operates that contest, LiquidSoapProducts.com, did not immediately return phone calls for comment.

But consumer agencies say desperate telemarketers are turning to all sorts of creative methods in an attempt to connect with new customers. Sweepstakes entries with small print designed to circumvent Do Not Call provisions are only one method.

The main techniques of evasion
"There is lot of 'noise' of ways people are trying to evade the rules," said Lois Greisman, who directs the federal Do Not Call program for the Federal Trade Commission.  "We've heard there are for-profit companies masquerading as non-profits. Some people are calling up saying, 'I'm taking a poll ... please answer A,B,C and D, and, oh, would you like to purchase this?' These are the main techniques of evasion."

By most measures, implementation of the federal Do Not Call list has been a success for consumers.  In February, the FTC announced that over 55 million consumers had registered for the list, and they had submitted some 150,000 complaints by the end of 2003.  Fewer than 45 companies had been hit with more than 100 complaints, suggesting widespread compliance with the list, the FTC said.

On the other hand, the Do Not Call registry has hit the telemarketing industry hard.  MCI announced at the end of March that it was laying off 4,000 employees and closing three call centers, largely because of the Do Not Call list.

It's not clear how widespread a problem Do Not Call evasion is; officials at the Federal Trade Commission say it's certainly not a crisis.  But incidents of it are percolating around the country.  One creative Canadian company got plenty of consumers to sign sweepstakes entry forms handed out at an auto show in Buffalo, said Jon Sorenson, spokesman for the New York State Consumer Protection Board.

The New York agency has been aggressive in pursuing Do Not Call evaders, and just recently topped $1 million in fines targeting firms that have violated the state's Do Not Call law. The agency targets any firm that calls New York consumers -- even if the company is located outside the state.

A large part of its task, Sorenson said, has been to target companies that attempt to evade the spirit -- not just the letter -- of the law.

Companies are trying to gather lists of consumers who have waived their Do Not Call list rights by signing sweepstakes forms, Sorenson said -- but those waivers can't be transferred or sold to third parties.  Only businesses that have established relationships with consumers can call consumers, Sorenson said, and transferred sweepstakes entries don't qualify.

Meanwhile, Sorenson said, some firms place phone calls looking to talk consumers into a face-to-face meeting so they can close a deal are often violating the law.  So are companies that call offering contest entries, trying to convince consumers to initiate a return call themselves.  Consumers who call are given sales pitches, such as offers for time-share condominiums. Any kind of a lure under false pretense is a Do Not Call violation, Sorenson said.

"We go beyond the pretense and look into the real motivation of the call," Sorenson said. "If our agency determines it's really a sales call, that's a violation."

Billing glitch or sales pitch?
New York officials expressed concern last month when AT&T accidentally added a small charge to over 1 million people people around the country -- including about 800,000 non-AT&T customers.  When some of the customers called to complain, they received a marketing pitch from AT&T.

"We are concerned when consumers say that all of this seems tied to a sales pitch for an 'unpublished' or unadvertised calling plan from AT&T," the state's consumer protection board said in a statement. "From what these consumers are telling us, some consumers are accepting AT&T's offer while others are angry that they have spent time to fix these bogus bills and then are confronted with a sales pitch."  The billing errors were first noticed at the end of February, but some customers are still just now noticing them because of billing time lapses and monthly billing cycles.

AT&T spokeswoman Tracy Belko said the charges stemmed from a systems glitch and the company quickly acted to correct the error. Customers are now being automatically refunded, she said.   Customers who call AT&T with questions are no longer receiving marketing pitches, but instead are being directed towards an automated message which advises them their bill has been credited.

"The idea that this has something to do with getting around the Do Not Call list is flat out wrong," she said.  "We do apologize for the inconvenience ... but these are billing errors only."

In any case, both the New York board and the FTC are urging consumers to file complaints even if the motivation for a call is unclear -- if, for example, the calling firm convincingly claims it's a non-profit agency.  Neither agency can initiate an investigation unless consumers complain first.

"If they sign something which results in a telemarketing call, and if the consumer doesn't call us and let us know this has occurred, we'll never know," Sorenson said.  "We tell people even if confronted with gimmicks, still let us know about them."

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