When President Bush launched the Do-Not-Call registry in June, he said it would "help Americans protect their private time or family time." Added the Prez: "Unwanted telemarketing calls are intrusive, they are annoying, and they're all too common." Consumers overwhelmingly agreed: More than 50 million Americans signed up for dinnertime peace.
But that ringing you'll hear when the law takes effect on Oct. 1 won't be in your head -- it'll be your phone. The Administration's simplistic message, accentuated by media hype, has oversold the public on what the registry will deliver. The Do-Not-Call Implementation Act is riddled with loopholes, allowing everyone from your bank to resort promoters to keep on dialing. When consumers wake up to the flaws, expect messy lawsuits, political finger-pointing, public outrage, and another black eye for legitimate marketers -- even those that are trying to comply.
The problem with Do-Not-Call is that its authors -- the Federal Trade Commission and the Federal Communications Commission -- had many people to please. Congress carved out loopholes for charities, politicians, and their paid fund-raisers. And the Administration, eager for a populist pitch to consumers without being seen as heavy-handed regulators, wanted broad business exemptions.
How broad? Every time you pay a bill, buy something, or have merchandise delivered, you give that company an opening to solicit you by phone for the next 18 months. Depending on how businesses interpret the law, even calling an 800 number to ask a question could be enough to trigger sales pitches for three months. And beware signing up for in-store raffles or clicking "I Agree" buttons when buying online: You could be giving companies permission to call you.
As their pool of phone numbers shrinks, businesses will intensify their sales pitches to existing customers. Expect calls from your bank offering to upgrade its services, for example. Callers who don't make explicit sales pitches are home free. Come-ons that announce you've won a hotel stay -- if you'll only sit through an on-site sales pitch -- are allowed, too.
Do consumers know about these loopholes? No. A Sept. 10 Harris Poll found that just 9% of adults are aware that the new rules apply only to for-profit telemarketers. No wonder the already bruised telemarketing industry is bracing for a backlash. "Consumers are being led down this primrose path," says Louis Mastria, director of public affairs at the Direct Marketing Assn. (DMA). "The FTC is creating the perception that you will never get a call again."
To deflect public ire, the DMA is ramping up an education campaign. The message: In most cases, companies that call won't be breaking the law. Nonetheless, "the FTC and FCC can expect a spate of erroneous complaints," says Tim Searcy, president of the American Teleservices Assn.
Complaints, whether spurious or legitimate, might fall between the cracks, however. The FTC and FCC remain at odds on key provisions of the law, how it will be enforced, and who'll pay for enforcement. Businesses covered by the FCC rules -- including such notorious callers as phone companies and financial institutions -- enjoy looser definitions for existing business relationships. The FTC conceded, in a Sept. 9 report to Congress, that businesses could exploit those discrepancies to boost calling. "This could annoy consumers," the FTC warned. Meanwhile, at least 12 states have refused to roll their own do-not-call lists into the federal list, creating yet another level of regulation.
A lawsuit challenging the constitutionality of Do-Not-Call in federal district court in Denver could put on the brakes. Telemarketers, led by Mainstream Marketing Services Inc., say Do-Not-Call restricts speech and violates the equal protection clause by establishing categories of calls to be blocked. If the judge halts enforcement, Washington should take the time to do the job right and create a bare-bones registry with no exemptions. Consumers seeking relief from phone hucksters shouldn't be sold a bill of goods by their government. By Lorraine Woellert