It's Dinnertime, and the Phone Starts Ringing

Regulations have done little to stem the tide of telemarketers flooding the market in search of sales.

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We may not agree on much in this country, but one thing most of us can agree on is that telemarketing is a big nuisance.

One survey, done by Walker Research in 1990, showed that 70 percent of Americans consider telemarketing an invasion of their privacy. To make matters worse, telephone scam artists reap an estimated $40 billion a year from unwary consumers, especially the elderly and the poor, according to the Federal Trade Commission.

The Telephone Consumer Protection Act of 1991 (TCPA) was Congress's first attempt at providing some concrete solutions to the serious problems of telemarketing.

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Time and place restrictions prohibit commercial calls to certain facilities, such as hospitals and suicide prevention centers, and they prohibit calls to private residences between 9 p.m. and 8 a.m.

Do-not-call regulations also require telemarketers to maintain lists of consumers who have requested not to be contacted. (People on these lists aren't to be called again for a period of 10 years.) Each telemarketer must maintain a written do-not-call policy that's available to consumers who request it.

Disclosure regulations include a long list of items that, depending on the nature of the solicitation, must be disclosed to consumers. At a minimum, telemarketers have to provide the name of the individual who is calling, the company or organization being represented, and a phone number or address where they can be reached.

But there are loopholes

Although the TCPA allows recovery of up to $500 for each violation, there are several loopholes that make recovery difficult at best.

For instance, if a telemarketer violates someone's do-not-call request, he or she can escape liability simply by claiming the call was an "honest mistake." With such innocuous recovery provisions, it's no wonder very few suits are won against telemarketers, except where obvious fraud is involved.

And, despite their aim to regulate the telemarketing industry, TCPA regulations have done little to stem the rising tide of telemarketers flooding the market in search of sales prospects. In fact, telemarketing now employs more than 400,000 people, yielding $435 billion a year in sales. Some analysts predict an annual growth rate of as much as 300 percent.

Frustrated by the increasing number of intrusive calls to their homes, many people now wonder why Congress didn't simply ban telemarketing altogether.

Yet, because telemarketing falls generally under the protection of the First Amendment, lawmakers were faced with a dilemma. The Supreme Court has long held that Congress must have a compelling reason to prohibit any form of speech, and the limitation must apply equally to everyone. But Congress wanted to allow an exception for so called "nonprofit" calls to private residences. Thus, constitutionally speaking, lawmakers could not ban commercial telemarketing while still allowing non-profit calls.

Why the exception for nonprofits? One reason was to lend a helping hand to charitable organizations, which traditionally rely on "phone drives" to raise money. Another reason was the perceived utility of telephone surveys conducted for demographic purposes.

The most significant reason was probably that politicians themselves rely on telemarketing campaigns to raise money, sway voters, and conduct public opinion polls during elections. During the 1996 presidential campaign, for example, Bill Clinton and Bob Dole each paid nearly $1 million to large commercial telemarketing firms. Likewise, many congressional candidates have made telemarketing the cornerstone of their campaign strategies.

A rather ineffective law

By making the decision to regulate rather than prohibit commercial telemarketing, Congress greatly reduced the effectiveness of the law.

In recent years, the telemarketing industry has grown at an unprecedented rate, due in part to the Telecommunications Reform Act of 1996, which allowed greater competition among cable, the Internet, and telephone providers. Industry analysts say the Telecommunications Reform Act caused an explosion in the telemarketing industry, with giant competitors pouring billions into new businesses and fighting each other for market-share.

Telemarketers' techniques

As telemarketing has become a big business with powerful corporate backing, it has also grown increasingly aggressive and intrusive. Consider some of the more annoying techniques employed:

"Call pacing" ensures that operators move quickly from one recipient to the next without wasting time dialing and waiting for an answer. A computer uses an algorithm to predict when the next operator will be available and dials your number in advance. If the algorithm is correct, you'll answer the phone just at the moment that an operator becomes available to talk to you. Of course, if there are no operators available to talk when you answer the phone - you guessed it - the system hangs up on you.

"Pre-calling" is anther intrusive technique designed to increase efficiency. Here, the computer automatically dials a phone number, determines whether it results in a live recipient or an answering machine, and then hangs up. Those numbers where live recipients have answered are called back in a few minutes by an operator who is now assured of a live connection.

Talk about adding insult to injury! These techniques force consumers to tolerate not only telephone solicitations, but also hang-up calls, computerized "filters," and other inconveniences - all for the sake of boosting telemarketers' profits.

Seeing no sign of legislative reform, some people believe that if telemarketing can be stopped at all, then it will be up to them to do it.

"Simply hanging up on telemarketers doesn't hurt them at all," says Bob Bulmash, founder of Private Citizen, Inc., an anti-telemarketing group that urges people to be on the lookout for violations of the TCPA. The group provides helpful hints on keeping proper records and filing formal complaints.

"But putting this law to use [does hurt them]. If even a modest fraction of consumers made telemarketers jump through the hoops required by this law, telemarketing would no longer be a profitable undertaking."

Taking the offensive

Other consumers employ a more aggressive approach, trying to make telemarketing unprofitable by slowing callers down, wasting their time, and expending resources. They put telemarketers on hold, ask questions during their sales pitch, and frequently request that the caller repeat information.

Still, in light of telemarketing's enormous marketing potential and powerful corporate backing, it is unlikely that this type of consumer action will have much of an impact on the industry.

Of course, there are a few simple ways to prevent telemarketers from invading your family's privacy.

* When telemarketers call, always demand to be placed on their do-not-call lists. Most telemarketers will stop talking the moment you mention the do-not-call list and won't bother you again. If you make a practice of doing this consistently, the calls will slow to a mere trickle within a month or two.

* When charities call, inform them that you don't give money over the phone. Ask them, instead, to mail the information. A reputable charity will always agree to this without being rude or pushy.

* Be sure to report any instances of fraud, coercion, or abuse to the state attorney general's office. Many states have been active in seeking to stamp out these types of activities, and the attorney general's office is a good place to start.

Perhaps, someday, Congress will consider an outright ban on telemarketing, an action that certainly would prompt a constitutional challenge by the telemarketing industry. Until then, we'll have to put up with the nuisance of unsolicited phone calls and do what we can to prevent them in our own homes. Unwary consumers will continue to lose money to telemarketers who are unscrupulous, unregulated, and, at least for the time being, unstoppable.

* James R. Barney, a former US Navy submarine officer, is a Yale Law School student whose studies at home are often interrupted by telemarketers.

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