May 2003

BY NADJI TEHRANI

I am sure if the bureaucrats of the FTC had any idea that the implementation of the revised Telemarketing Sales Rule (TSR) regulation would lead to the above graphically illustrated TOTAL ECONOMIC DISASTER, they would not have wasted their valuable time to come up with it!

When you think about it, this recessionary economy needs such a regulation like it needs a hole in the head!

I recently attended an ATA-sponsored legislative conference in Washington, D.C. The conference was attended by many industry leaders, all of whom were extremely concerned about the impact of the new TSR however discriminating, unfair and unenforceable it may be!

Here are some observations made at the conference:

1. Do-not-call (DNC) and TSR regulations will have the strongest adverse effect on small businesses.
2. Over regulation means job elimination.
3. Most of the members of Congress who spoke at the conference did not have a clue about the number of jobs the above-mentioned regulations would eliminate!
4. Whose job is it to keep them fully informed?
5. The FTC had NO IDEA that 3-5 million jobs would be eliminated!
6. No business in the world can survive, let alone grow, without the telephone and cutting-edge telecom technologies.
7. Our industry is suffering from a poor and unfair image.
8. The FTC's own statistics show that "a typical household receives only 1.6 telemarketing calls per week" on average.
9. Those who know how useful telemarketing is don't think this is too much.
10. Those who dislike it, think that's too much.

COMMENTARY AND ANALYSIS
The FTC first proposed a "national" DNC list well over a year ago, and promised from the beginning that it would be a "win/win" for telemarketers ' not only would telemarketers be able to better identify those consumers who would be interested in an offer via the phone, but there would be only ONE list to access (all the state lists would magically disappear). Many in the industry went along with this approach, so that the mantra across all telemarketers became "a national list is a good idea, AS LONG AS IT PRE-EMPTS THE STATE LISTS." The problem was that this was never a possibility; the FTC never had the authority to pre-empt the state lists. The FTC promised pre-emption, or at least allowed telemarketers (and Congress, for that matter) to believe that it would happen, all the while knowing that it lacked the power to make it happen. This smoke-and-mirrors campaign by the FTC worked ' telemarketers bought into the idea that, when all was said and done, there would be one giant national list, and the process of DNC compliance would be correspondingly easier. The way things stand right now, however, telemarketers will ultimately have a national list, ALONG WITH 30 OR MORE STATE LISTS with which they must comply. (Note: of the last eight states to pass DNC laws, only three have specifically indicated that they will definitely opt for making use of the Federal program.)

The most important thing to remember here is that it's not only telemarketers who are under attack ' it's ALL marketers of any kind. Marketers' attempts over the past decade to move toward "targeted marketing" and away from traditional or broadcast marketing (newspapers, radio, TV) are suffering from a backlash. Targeted marketing requires two things ' more access to personal information about consumers (to target them), and the marketing channels to contact consumers directly (telephone, e-mail, direct mail). The problem is, consumers want to retain their private information, and telemarketing and other targeted marketing channels have become victims of their own success ' because they are so successful, more and more entities have become involved, the technology to distribute the messages has improved, and consumers have been hit with more and more "targeted" messages.

The easiest target for regulators to go after in targeted marketing for consumers was telemarketing. The telemarketing industry agreed that some regulation would not necessarily be a bad thing, and went along with the changes enacted by the first major telemarketing regulation, the Telephone Consumer Protection Act (TCPA), which is enforced by the FCC. However, at this early point, telemarketers (and, in fact, all marketers) made a crucial mistake ' they allowed the anti-telemarketing forces to frame the terms of the debate. Rather than debating the pros and cons of restricting extremely successful marketing methods in the context of commercial free speech concerns, the question became ' how can you possibly justify making calls to grandma during dinner time? Once that became the focus of the debate, it was already over. By failing to place themselves squarely within the greater framework of marketing in the United States, as opposed to attempting to justify telemarketing itself standing alone, telemarketing has been "slippery sloped" to the point where it now faces extinction. As if on cue, regulators are now turning their attention to e-mail and direct mail channels.

Marketing, all kinds of marketing, is the life-blood of the American economy. It is nevertheless a fact that every type of marketing, be it door-to-door, product placement in movies, radio jingles, or even that insurance guy at the cocktail party, represents an annoyance to the receiver of the marketing message. That's the nature, the essence of marketing ' not everyone is going to be overjoyed to receive a marketing message. Determining how to match a product/service with the needs of a particular consumer at just the right moment is the fundamental challenge of the inexact science of marketing. Since these elements vary among consumers (or for an individual consumer depending on time of day or even emotional state), marketing requires casting a wide net to bring even a small catch. Consumers understand this and recognize that the deluge of marketing messages they receive is part and parcel of being members of a robust free-market economy. The FTC, the federal agency whose job it is to foster honest trade and marketing in the United States, has consistently failed to grasp this essential point when it comes to telemarketing. Telemarketing is just one type of marketing that happens to make use of a telephone system (a "public" telephone system, at that) that would not exist without billions of dollars of help from public sources. To restrict the ability of honest marketers to reach out to attempt to sell a product, the most quintessential of American commercial speech, is simply contrary to constitutional principles, but more importantly, contrary to simple common sense.

A free national list (in the unlikely event it survives the ATA's and the three other major legal challenges) will accomplish only one thing ' it will put millions of hard-working individuals out of work. Marketers will still "annoy" consumers with their marketing messages, and consumers will still complain about it ' all the while buying billions upon billions of products in the process. This is the dance of American capitalism. Are we going to outlaw marketing at Christmas time because everyone complains about the commercialization of our holidays? It's annoying, so it must be stopped, right? Of course not ' it would cripple huge segments of our economy, just like the elimination of telemarketing. The FTC should let the free market establish what level of telemarketing makes sense across the United States ' if people truly are upset with telemarketing, if they truly do not want to purchase anything over the phone, telemarketing will die of its own accord! 

Legislative Update
All lawsuits mentioned in last month's Publisher's Outlook have been filed and are in the process of waiting for request for summary justice. The FTC has granted supplemental petitions from the Direct Marketing Association (DMA) and the American Teleservices Association (ATA) regarding their request to stay the effective date of certain provisions in the Amended TSR. The DMA renewed its request for a stay of two components of the TSR's abandoned call safe harbor: 1) the maximum allowable abandonment rate of three percent and 2) the requirement to keep records showing compliance with the three percent abandonment rate. The ATA submitted a similar request that the FTC "revisit its grant of the stay to expand it to encompass all Amended TSR provisions that govern the use of predictive dialers."

The FTC decided to stay the implementation date by which it will require full compliance with the call recording provision of the abandoned call safe harbor until October 1, 2003.

The FTC also decided to partially stay, until October 1, 2003, the date at which it will require full compliance with record-keeping requirements to document the use of a recorded message in instances of call abandonment.

As always, I welcome your comments.

Sincerely,
Nadji Tehrani
TMC Chairman, CEO and
Executive Group Publisher
ntehrani@tmcnet.com

[ Return To The May 2003 Table Of Contents ]

I'd like to take this opportunity to extend heartfelt congratulations to all the honorees of the 2003 Top 50 Inbound Teleservices Agencies Rankings. 

I know how difficult it is to win this coveted award, especially in this difficult economy with growing offshore competition for the domestic agencies.

We recognize and appreciate your major contributions to the growth and prosperity of Corporate America. You have produced and saved more that 20 million jobs since 1983 and are currently producing and protecting more than 1,400,000 jobs in the United States per year. With your contributions to customer service and customer retention, you are helping Corporate America sustain its edge in the global economy as the services you provide help your clients enhance their brands, differentiate themselves and gain loyal customers.

In my judgment, you are the cream of the crop and it is always a great pleasure to work with you, and I thank you for your support.

Sincerely,
Nadji Tehrani