Telemarketing 'robocalls' will be history on Sept. 1, mostly

Just after you pour milk on cereal or pull a roast from the oven, the sound seems to come at the exact same moment every time:

"BRRNNNG ... hello, we have trucks in your area tomorrow so we can give you incredible savings on carpet shampoos in two full-size rooms."

Or

"BRNNNNG ... because you are a preferred customer, your name has been chosen for a free, four-day vacation in Las Vegas."

As of Sept. 1, such prerecorded calls will be history.

Unless telemarketers have received written permission from a customer that he or she wants to receive such calls, the Federal Trade Commission (FTC) is slapping serious penalties on violators: up to $16,000 per call.

"I think this ban will be effective because the fines are very stiff," says Scott Tesla, a professor of business at Cabrini College outside Philadelphia. "Many of these companies make thousands of calls and with this kind of penalty, the serious money adds up quickly."

The price of such calls has dropped along with the technology that does the dialing, says Tesla, so the number of companies getting into the act has soared in recent years.

"Compared to 10 years ago, the barriers to entry have dropped so much that every Tom, Dick, and Harry has gone into the business," he says.

The new ban is part of amendments to the FTC's Telemarketing Sales Rule, which went into effect a year ago. Calls not covered by the ban include those from charities, banks, insurers, phone companies, survey calls, and certain healthcare messages such as prescription notifications.

Other exceptions are calls not trying to sell goods or services, such as informational calls about cancelled airline flights and those from debt collectors. Some are protected as free speech under the First Amendment; others do not fall under FTC jurisdiction.

But the sales-pitch calls are the ones that now number in the billions, and residents have complained loudly to local, state, and federal governments.

"People have been getting angrier and angrier and angrier and deeply resent this practice," says Barbara O'Connor, director of the Institute for the Study of Politics and Media at California State University at Sacramento. "At first, the idea was a bit of a novelty, and so people put up with it. Now they tell pollsters it's one of the most detestable aspects of modern life."

Several states have put restrictions on political calls, which proliferate around election time. US Sen. Dianne Feinstein of California last year introduced legislation – known as the Robocall Privacy Act of 2008 – to establish fines for anyone who makes or sets up one-sided, computer-generated calls without following certain rules. This includes calls after 9 p.m. and before 8 a.m., or more than two to the same phone number each day, and it prohibits masking the robocaller's phone number on caller-ID tools.

But Ms. O'Connor says such laws have not had the effect they might because residents have been reluctant to report abuse. The new FTC law tries to simplify this process by allowing people to file complaints online (FTC.gov) or by calling 1-877-HELP.

"It's very good that this new law is federal," says O'Connor, "because that prevents robocallers from simply moving to other states. That has been a problem up to this point."

Some firms are actually welcoming the new idea because it clarifies their own business practice.

"We are looking at this as a good thing," says Meghan Devitt, a spokeswoman for Vontoo, a 100 percent permission-based, direct voice marketing company that gives clients information about sports teams and promotional ticket offers. "We don't want to be associated with the robocallers of the world, which are an entirely different service than us."

One challenge in implementing such laws this is finding the precise wording that will have teeth in courtrooms.

"We should watch for whether or not this works," says Roy Hadley, counsel with the Atlanta office of Bryan Cave LLP. "If it works, you may not see any more legislation. If you see telemarketers getting creative and getting around the written approval requirement, you may see additional legislation as to what would constitute the written requirement and tightening that up."

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