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Telemarketers face new restrictions

Congress is considering a plan to set up a national database of people who don’t want to be pestered by telemarketers. But don’t expect the new rules to silence these annoying sales pitches completely. By John W. Schoen.
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A new front has opened up in the war between telemarketers and the people who don’t want to hear from them. Congress is considering a plan to set up a national “do not call” list — a database of people who don’t want to be pestered with sales pitches on the phone — along with fines for rogue telemarketers. But don’t expect the new rules to silence these annoying calls completely.

THE BILL PROVIDES $16 million to set up a national database of people who are fed up with getting interrupted at home by telemarketers. Once your number is listed in a so-called “do not call” registry, telemarketers would be banned from calling you, with proposed fines of up to $11,000 for those who break the rules. The system would be backed by a new set of rules unveiled by the Federal Trade Commission last month to limit the tens of millions of unsolicited calls placed each day by telemarketers.

The House Wednesday voted 418-to-7 to approve the restrictions, but it’s still not clear whether they will win full Congressional approval. The bill now goes to the Senate for further debate. Though lawmakers have been reluctant to oppose the measure publicly, several Senate Democrats have said Senate rules could allow opponents to kill the measure behind closed doors.

Some 27 states currently have such lists, and consumer groups have long advocated the creation of a national list backed by fines for telemarketers who ignore consumers’ desire to be left alone.

”(State lists) are wildly popular,” said Jean Ann Fox, of the Consumer Federation of America. “Consumers want to be able to say whether or not they get calls on the phone that they pay for in their home.”

The new FTC rules will also limit the use of technology that has helped increase the onslaught of unsolicited sales calls. So-called “predictive dialers” place automated calls faster than telemarketers can handle them, prompting you to answer the phone only to find no one on the line. The FTC rules, which take effect in April, would limit such “dead air” calls to 3 percent of all calls made.

“The consumer is on the receiving end of every new invasive technology — like auto dialers and pre-recorded artificial voices,” said Chris Hoofnagle, deputy counsel at the Electronic Privacy Information Center. “The consumer is losing more and more control over their phone line. The whole idea is to try to shift the balance of power.”

But the ink was barely dry on the new FTC rules before the telemarketing industry fired back with a set of lawsuits, arguing that limitations on their ability to call potential customers violate their First Amendment rights to advertise. The Direct Marketing Association, which has set up its own “do not call” list, says it’s not opposed to the idea. But it doesn’t think the FTC should be making rules limiting what telemarketers can do.

“The FTC clearly overreached and acted prematurely in attempting to set up a government-run do-not-call registry and to regulate other technical aspects of the industry,” said DMA president Robert Wientzen in a press release late last month announcing the lawsuit.

The FTC says fees from telemarketers will help pay for the national “do not call” system, which will take about 6 months to set up once funding is approved. Consumers could register for five years, and telemarketers would also be required to check the list every three months.


But even once it’s up and running, there are a number of loopholes in the new rules that could keep your phone ringing during dinner. For starters, politicians and non-profit agencies will be exempt from the new rules. Companies that you already do business with — like banks or stores — will still be allowed to call you. And because the FTC only regulates business between states, a business in your state will still be able to call you.

And the new rules also won’t apply to two key industries, according to Jason Catlett, founder of the web site

“The major gap in the FTC authority is that they can’t govern banks and telephone companies — which are the probably the two biggest users of telemarketing,” he said.

That’s why the bill moving through Congress also calls on the Federal Communications Commission to set up similar rules to close the gaps in the FTC’s jurisdiction.

“If the FCC also enacts a rule similar to the FTC ‘do not call’ rules, eighty percent of the calls consumers receive at home should be eliminated,” said FTC spokeswoman Cathy MacFarlane.

Consumer groups are divided on how far the FCC will go in limiting telemarketers, but some say early public comments indicate the commission is sympathetic to consumers’ telemarketing complaints. But the devil is in the details. Some consumer advocates want rules that force telemarketers to identify their company name on caller ID devices. Others suggest restricting the hours telemarketers can operate — banning calls during dinner hours, for example.

No matter what federal rules are enacted, states will continue to be able to limit telemarketing, according to Nancy Sabella, Executive Director of the National Association of Consumer Agency Administrators.

“There’s going to be some gaps that will need to be covered,” she said. “And the states would be likely place to do that.

As consumers have gained ground in the battle to protect their privacy, telemarketers have opening up yet another front. Companies have now begun using their own customer service centers to “upsell” you to other products when you call to book a flight or check your credit card bill.

“Lots of businesses do this,” said Hoofnagle. “You call up for one purpose and they steer you toward sales. But the FTC rules are triggered at that point — because it’s the business not the individual initiating the pitch.”

The FTC is also setting up a way for consumer to report telemarketers who break the new rules. But to do that, you’ll have to stay on the line long enough to get the name of the company responsible for making the call, says Robert Bulmash, president and founder of Private Citizen, an anti-telemarketing group.

“Always act interested in the call,” he said. “Then tell them you’re concerned about doing business over the phone and would like the name and address of the firm” making the call.

The Associated Press contributed to this report.