Will feds tackle telemarketers?

Tired of telephone sales pitches interrupting dinner? Consumers across the country are signing up for a solution: "no- call" lists that bar telemarketers from calling their lines.

Customers hoping to block every unwelcome ring may still be disappointed. An array of callers – from charities to credit-card companies – are exempted from most no-call lists.

Still, the lists are proving wildly popular among millions of phone customers who have flocked to enroll from Maine to Alaska. In all, 16 states have official no-call lists up and running, including Indiana, where 40,000 phone customers signed up in a single day. "It was pretty crazy," says Staci Schneider of the Indiana Attorney General's office.

The popularity of the state programs hasn't been lost on the Federal Trade Commission, which has proposed a similar national no-call list.

Under the individual state rules, consumers can register via the phone, mail, or e-mail. A few charge consumers to sign up, including Florida where the fee is an initial $10 per phone line and $5 each additional year.

Under the FTC proposal, consumers would register for the national no-call list for free by dialing a toll-free number. Based on the experience in states, consumer advocates warn that the FTC had better be prepared for tens of millions of eager registrants.

"They've certainly been popular," says Susan Grant, of the National Consumers League (NCL). "[Consumers] are sending a strong signal they don't want telemarketer calls."

At the end of the registration period, telemarketers are required to purchase the "no-call" lists and scrub those numbers from their own databases. Most states update their list quarterly or semiannually.

Violators can face steep penalties – ranging from $500 to $10,000 per call. Missouri, for example, collected more than $150,000 in penalties from violators in its first month of operation last year. Those sued included the operator of the Miss Cleo psychic hotline. "We were serious about enforcing this law," says Scott Holste, a spokesman for the Missouri Attorney General's office, where three dozen attorneys have investigated alleged violations.

Despite such efforts, consumers can still expect plenty of calls from solicitors. Banks, credit-card providers, and insurance companies, as well as nonprofit groups and newspapers, are exempt under many state laws. Some states make exceptions for sellers who place calls in their own neighborhoods or who don't try to complete a sale during the conversation.

Similarly, the FTC's proposed rule does not include telephone carriers, insurance companies, and others who do not fall under its scope of regulation such as nonprofit organizations. Another controversial provision opposed by consumer groups would make an exception for telemarketers who have a preexisting relationship with a consumer. "You get a lot of these exemptions; it winds up being a Swiss-cheese piece of legislation," says Jeff Kramer of the AARP in Washington.

That's what Ray Roundtree discovered when Kentucky introduced a no-call law in 1998 with 22 different exemptions. "I didn't see any letup," says Mr. Roundtree, of London, Ky.

He estimated he was still receiving as many as five telemarketing calls each day. Roundtree helped push for a stricter law approved by Kentucky legislators last month that plugged up most exceptions.

Telemarketing-industry officials say such moves will cause financial hardship. "Some 600,000 people in Kentucky are on the no-call list. That kills the economy and hurts people who have telemarketing jobs," says Scott Frey, president of possibleNow.com, which helps companies comply with state no-call lists.

Last month, Congresswoman Nancy Johnson (R) of Connecticut introduced legislation for a broader national no-call list that would cover industries not subject to the FTC's reach. Telemarketing-industry officials worry that any national no-call list – piled on top of conflicting state rules – could damage their $660 billion business.

"It's a hodgepodge of laws that truly would not be an easy task for smaller telemarketers," says Jim Conway, vice president for government relations with the Direct Marketing Association.

While the FTC has not yet decided whether the federal rule would supersede the state rules, Mr. Conway says there should be just one national standard.

But consumer advocates say the federal law shouldn't take the place of stricter measures adopted by states. The comment period for the proposed FTC rule ends today (www.ftc.gov). Already, 30,000 people have sent comments – the most the FTC has ever received on any issue. "It's overwhelmingly favorable," says Eileen Harrington, associate director of the FTC's division of marketing practices.

The FTC will hold a working session in early June at its Washington headquarters to discuss issues raised by the public comments.

Even in states where a no-call law exists, individual telemarketers must usually stop calling once asked to by a consumer.

To eliminate more unwanted calls at once, consumers can register with the Direct Marketing Association. The DMA has operated its own no-call list since 1985. It costs $5 to join and can be accessed at www.the-dma.com. The DMA no-call list, however, covers only member companies, who face expulsion for wrong calls.

Where no-call rules apply

At least 27 states have laws that curb telemarketing. Of those, 16 (listed below) have state-run no-call lists already in effect. A few others, including Alabama, Colorado, and California have lists expected to be up and running later this year or next.

For more information about any state's no-call list, contact that state's attorney general's office.












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