The day the dinnertime phone calls stopped

Spurred by an irritated public, politicians have signed the death notice for telemarketing. But the end of sales calls will deliver another blow to the staggering economy.

Published July 15, 2003 7:30PM (EDT)

The overwhelming popularity of the national do-not-call list, which has logged more than 23 million telephone numbers since it went live on June 27, does not come as a surprise to people in the telemarketing industry. Telemarketers know how we feel about them. We make it clear all the time. They make 104 million calls every day, and while a surprising number of their pitches produce happy new unions between corporations and customers, tens of millions of calls end in words that should not be put down here. Even you, gentle reader, likely become an undignified boor when you receive a sales call -- you yell, swear, lie and, just as the harried marketer is getting to the best part of the deal, you hang up. And you don't feel bad about it; telemarketers, society has determined, do not deserve respect.

There is certainly no mystery to why we hate telemarketers. They bother us; we don't like that. But here's what irks the telemarketers -- they don't think the government should have stepped in to help us. They feel they've been singled out, unfairly barred from commerce, and abused by virtually every official in the country. "Even the president got himself right in the middle of this," says Jon Hamilton, a telemarketing consultant who helps firms set up their call centers. "Since when did the government become in charge of regulating annoyances?"

Telemarketing is an enormous business that hires millions of people and contributes to billions in commerce every year, but it is suddenly reeling under what insiders describe as a politically expedient bit of regulation. It surprises and offends telemarketers that, of all the scourges we suffer, lawmakers made this one a priority. Telemarketing is an annoyance, but that's all it is, people in the industry insist. Unsolicited sales calls won't give you cancer or heart disease or make you fat. Telemarketing doesn't damage the environment. It doesn't cause car accidents. Telemarketers don't hurt kids or animals. They aren't suspected of harboring weapons of mass destruction. Yet politicians of every stripe are united behind the issue, and they've come up with a solution -- the do-not-call list -- that experts say will devastate telemarketing.

So telemarketing will die. "Where's the bad news?" you're probably wondering.

In the United States in 2001, telemarketing companies employed 4 million people and generated $274 billion in sales, according to the WEFA Group, an economic research firm. The Federal Trade Commission, which set up the National Do Not Call Registry, estimates that by Oct. 1 -- the date on which telemarketers will be barred from calling the numbers on the list -- at least 60 million phone numbers will be off-limits to sales calls.

After that, says Tim Searcy, executive director of the American Teleservices Association, employment in his industry will plummet. Two million people will more or less instantly be put out of work, he says. That's just an estimate, and it's in Searcy's interest to play up the horrors that the new law will cause, but his theory is not completely unbelievable. If half the phones in the country will no longer accept marketing calls, it's not unreasonable to expect that half the people who work in the industry will no longer be needed -- and that, certainly, won't be good for the depressed economy.

The problems are compounded, Searcy says, when you consider the kinds of people telemarketing attracts. The industry hires an unusually large number of single mothers, people who are just getting off welfare programs, and people with physical disabilities; and most of its call centers are in rural areas, places where jobs are already scarce. When telemarketers lose their jobs, they'll have a hard time finding something else.

"There are towns where the largest single employer is a telemarketing firm," Hamilton says. "The local McDonald's only needs 10 or 15 burger flippers. It can't absorb thousands. Where are all those other people going to go? They're going to go on welfare."

Critics of telemarketing don't dispute that this new rule is going to cause economic hardships; they say the hardships are worth it. "It's a social welfare issue," says Robert Bulmash, who heads Private Citizen, a pioneering anti-telemarketing firm. The new rule might cause thousands of telemarketers to suffer, but millions of the rest of us will be better for it, he says. "Let's say that 10,000 handicapped people are working in the industry," he says. "What about the 10 million handicapped people who can't get to the phone when it rings, and who feel they have to get to it because this might be the one call that they've been waiting for?"

But the do-not-call list is open not only to the aged or the infirm; it's open to every healthy American who's physically capable of answering the phone but who feels, somehow, that he or she has a right not to be bothered if there's a salesperson on the other end. In a free country, what's so sacred about the phone that it should be exempt from commerce? And, if we do have a right not to be annoyed via the phone, how can politicians claim that they're allowed to infringe upon that right in order to give us political messages -- as they do in this regulation? People in the telemarketing industry see this as massive hypocrisy, and it makes them angry.

And while one is loath to defend them, these faceless, fast-talking people who call us during dinner, perhaps it's time someone did. Telemarketing isn't a crime. It's a profitable business responsible for legitimate employment. Yet it's just been regulated out of existence, and the country is applauding.

The FTC, which is mandated by Congress to review telemarketing rules every five years, first proposed the creation of a do-not-call list in January 2002. The commission asked the public to comment on the idea, and within a few months it was flooded with more than 60,000 opinions. The "overwhelming majority" of these people supported the new rule, the government says.

Browsing through the comments, you see a country of virtually one mind regarding telemarketers -- Stop them! People are fed up by the number of calls they receive every day, by the attitude of the salespeople -- they're "rude," they "do not understand the words 'not interested'" -- and by a feeling of powerlessness over the telephone.

"When one is called on a Sunday morning with the intention of discussing burial plans, it's gone too far," one woman who identified herself as a senior citizen wrote. In some comments, there is, too, a sense that American society is quickly becoming nothing more than a culture of pitchmen and their products, and that the home should be a refuge from the constant drone of capitalism. "It first started with the door-to-door salesman, then the telephone marketers, next was the fax, e-mail and now Internet, pagers and cell phones. When will it stop?!" asks Matthew Damba, a resident of Virginia.

"I think there are two levels of anxiety that these calls create," says Robert Bulmash, of Private Citizen. "To some it's the calls themselves. But then there's another feeling which perhaps can't be cogitated on the part of the victim -- it's not the calls themselves but the sense that you're nothing more than sheep for the telemarketers to graze on, that you're being seen not as a person with rights but as a source of revenue."

Bulmash is right: The industry does see us as a source of revenue, but that's probably because we are, despite our complaining, rather too quick to buy stuff over the phone. On average, says Searcy of the American Teleservices Association, an American household makes three purchases per year in response to sales calls. In 2001, according to the WEFA Group, telemarketing purchases represented 4 percent of all sales to consumers in the United States, an enormous slice of economic activity. Before the imposition of the do-not-call list, WEFA estimated that by 2006, about $403 billion in sales would be made by telemarketers. By way of comparison, just $34 billion in retail sales were made over the Internet in 2001 -- but imagine the hue and cry if the government proposed regulations (such as, at the very least, the imposition of a sales tax) on e-commerce.

One reason companies like selling over the phone is that it's extremely cheap to do so. During the past decade, long-distance telephone charges have fallen dramatically, so if "I call you and spend 18 seconds on the phone, at six-second increments that call has cost me about a penny," says Bulmash. The telemarketer hasn't made a sale, but for just a penny the company has dropped its message into a customer's ear. "If I were to send that same person a mailing it would cost me 25 cents apiece," Bulmash says.

In the 1990s, the industry became even more efficient through the adoption of what might be termed the assembly-line method of telemarketing. This was made possible by a technology called the "predictive dialer," and you can blame it for making your life hell. The predictive dialer is a computer that initiates all the calls in a large call center. It dials numbers plucked from a database, and after screening out dead lines, busy signals and answering machines, it routes live calls to available representatives. The dialer allows salespeople to spend most of their time -- up to 55 minutes out of every hour -- making pitches. But the device is annoying to folks at home. Predictive dialers are responsible for the few seconds of silence you're greeted with when you answer a telemarketing call; the lag is caused by the dialer looking for a sales rep available to make a sale to you. Because the dialers typically dial more numbers than there are representatives in a call center, the devices also hang up on a number of calls answered by people at home, a phenomenon that many find creepy.

Technology allowed telemarketers to make more calls and, consequently, more money, but it also turned the industry into a pariah. Telemarketers could now make tens of millions of calls every night, and Americans were furious about it. Around the country, politicians, naturally, saw an opportunity to act. The federal government, in fact, is late to the party -- most states have already imposed their own do-not-call lists.

Insiders say that the industry was quite aware that its actions were angering Americans, and telemarketers did make attempts at reform. Meetings were held, proposals were floated, and initiatives were agreed to. But perhaps because the money was so good, telemarketing companies did little to change their ways. Jon Hamilton says that he was once at a telemarketing conference and "as part of my presentation, I said that the biggest surprise to me has been the lack of panic on the part of the industry." When he said that, someone in the audience yelled, "We call Jon 'Chicken Little!'" That was "a little funny," Hamilton says, "but my point was that a lot of companies have been hiding their heads in the sand."

Clearly, some in the industry still believe that they have done nothing wrong. The American Teleservices Association, the most hard-nosed of the trade groups representing telemarketers, maintains that its members have nothing to apologize for. That millions of people have signed up to keep their phones off-limits to salespeople may indicate that people want to reduce the number of ads they're shown every day, the group says, but it doesn't mean that people hate sales calls. "I think unfortunately we're in a society in which commercial messages bombard us all the time," executive director Searcy says. "Where you can say, 'No, I don't want to receive commercial messages anymore,' people will do it. If I told you that you didn't have to see television ads anymore, would you watch them?"

Asked if he thought his industry has an image problem, Searcy said: "I don't know an industry that doesn't have an image problem. Airlines have an image problem, Catholic priests have an image problem, journalism has an image problem. So everyone has an image problem -- you pick your poison."

At the same time that it created the do-not-call list, the FTC also issued telemarketing rules that would seem to go far in curbing the industry's worst practices. The commission ordered telemarketers to set their predictive dialers to "abandon" -- that is, hang up on -- no more than 3 percent of the calls made, and it prohibits call centers from masking their phone numbers from caller I.D. devices, which has been a common practice in the industry. Some telemarketers object even to these rules, but many say that they seem like commonsensical, necessary reforms. The rules won't prompt us to love, or really even tolerate, telemarketers, but they will probably reduce the number of calls that are made, and we'd have an easy way to identify who's on the other end before we pick up the phone.

The national do-not-call list, however, will destroy the industry -- everyone in the telemarketing business seems to agree with that assessment. Experts provide various theories about why this will occur, but the fundamental reason seems to be this: Americans think they don't like telemarketing calls, but they're wrong. Americans believe they want to be on a do-not-call list, but their past actions -- namely their purchases -- betray their true feelings. The FTC says that the do-not-call list is justified because it merely gives people a choice over whether they'd like to receive sales calls; according to that theory, the people who actually do buy things from telemarketers won't add their numbers to the registry, and the industry will not suffer at all. But that analysis is faulty, the industry says. In the abstract, everyone hates to be sold to -- you hate it when commercials interrupt your favorite TV show, you hate the "intrusive" ads displayed on your favorite Web site, you hate being handed pamphlets on the street, and you hate being called by a telemarketer who promises "a fantastic deal."

If given the choice, we'd all say we prefer not to see any commercial messages unless we ask for them -- but we'd all be lying. The fact is that even though we dislike advertisements in general, we do like specific ads, the ones for products that happen to appeal to us. And many Americans will sign up for the do-not-call list under the impression that they do not want to buy things over the phone, but they're lying, too. Some significant number of people who will sign up have in fact purchased something -- a phone service, a credit card, a magazine or newspaper subscription, or season tickets to the symphony -- after a telemarketer has called them and asked them to do so. And, if the right deal came along in the future, they would do it again, too.

The national do-not-call list, says Hamilton, makes it exceptionally easy for Americans to exercise a choice that they probably cannot make rationally. "Many of the state lists or the [Direct Marketing Association's] list asked you to think about whether that's what you wanted to do when you signed up," he says. "The federal list was set up so it would be a knee-jerk reaction." You could have one bad incident with a telemarketer and decide to keep your number permanently off-limits from all of them. Moreover, he says, "there are people who are going to sign all their friends up, too, because they're nuts! There's no checks and balances."

If the millions of people who do in fact buy from telemarketers decide to put their numbers on the do-not-call list, the effect on the country's ailing economy will not be good. Billions of dollars of economic activity will not take place, and, more critically, millions of people will lose their jobs. Recently, the Direct Marketing Association, an industry trade group, sent out an e-mail survey to 200 of the largest telemarketing companies in the country. Because only 31 of the 200 returned the surveys, it's unclear how accurate the results may be -- but they're nevertheless instructive.

The DMA found that 60 percent of all telemarketing sales representatives are women, and 25 percent are single mothers. More than a quarter are students, a third are minorities, and 5 percent are physically disabled. "Moreover, 10 percent of the sales representatives were reported to be immediately off welfare," the DMA said in its comments to the FTC. "Therefore, it is clear that in addition to employing many people, telemarketing, through flexible hours and workplace, allows for great diversity in employment opportunities. Many use telemarketing as a first job opportunity when entering the workforce from school or welfare."

Telemarketers are not unionized, and there was no labor lobby fighting for their welfare in Washington during debates over the do-not-call list. Still, many of them sent in letters to the FTC -- some were forced to do so by their employers, but others seem to have done it of their own accord -- and their opinions are at least as passionate as those from people who say they're upset with too many calls. "I am a disabled college student who has relied heavily in the past on telemarketing jobs to help make ends meet," wrote a Florida resident named J. Edward Resmondo Jr. "Telemarketing means jobs. These restrictions might very well cost the people who can least afford it the opportunity to work, which in my case it could cost me the opportunity to finish my college education. I believe that your efforts would be better focused on fraud and not the legitimate marketers whom I have worked for in the past and will work for in the near future."

If you don't care about the plight of these workers, there may be one other reason for you to consider putting up with the annoyances of telemarketing -- it probably makes many services cheaper for you. If companies that currently market their services over the phone are forced to now get to you in another, costlier way, there's a chance that the price you pay for goods and services will edge up slightly. For example, Avery Abernethy and Randolph Beard, professors of marketing and of economics at Auburn University in Auburn, Ala., theorize that telephone service has probably become cheaper and better for Americans in part due to telemarketing. In a research report they submitted to the FTC, they point out that people who subscribe to long-distance telephone service often receive calls from other companies offering them better deals. The possibility that you could be so easily snatched away by a rival forces your own phone company to keep your rates low and your service quality high -- which means, essentially, that everyone's rates stay low.

The theory is applicable beyond just long-distance telephone service, Beard says. In general, "advertising is a tool that companies use to raid their rivals' customers," he says. "Making advertising more expensive" -- which is what the telemarketing rule will do -- "makes raiding customers more expensive, and that reduces one of the incentives for firms to provide quality service."

It appears that lawmakers considered few of these arguments when they were deciding to institute the do-not-call list. Congress took just a few days to debate the Do-Not-Call Implementation Act, the law that allows the FTC to collect from telemarketers the money to set up the registry. In February, the law passed the House with just seven members opposed, and it passed the Senate unanimously.

Lawmakers basked in the opportunity to show voters that they were actually doing something to make people's lives much better. In one committee hearing on the bill, Rep. Edward Markey, D-Mass., was pointing out that consumers were "plagued by unwanted, intrusive, unsolicited telemarketing" when, according to the Associated Press, "Markey's remarks were interrupted by the loud ringing of his cellphone. Answering the call, he said, 'No, I don't want to change my phone service. How did you get my cellphone number? I'm in a congressional hearing right now.'" The AP added that "Markey's staff said after the briefing that the congressman had turned up the volume on his phone and arranged to receive the call to make his point about intrusive telemarketing."

When he signed the do-not-call bill, President Bush, too, played up the idea that people have a right not be bothered at home. "Unwanted telemarketing calls are intrusive, they are annoying, and they're all too common," Bush said. "When Americans are sitting down to dinner, or a parent is reading to his or her child, the last thing they need is a call from a stranger with a sales pitch. So we're taking practical action to address this problem."

What Bush did not mention, though, is that under the new regulations, he and every other politician will still have the right to call you whenever they want to ask you for money or votes. Some members of Congress had objected to this idea. Rep. Joe Barton, a Texas Republican who heads the Congressional Privacy Caucus, had proposed an "opt-in" model that would have prohibited all unsolicited calls, even calls from politicians, unless you added your name to a kind of "do call" list. "He feels like if we're going to pass a law we can't exempt ourselves," said Samantha Jordan, a spokeswoman. "You have to make it across the board." Not surprisingly, Barton's idea didn't fly; most lawmakers seemed to be OK with limiting sales calls, but they considered their own calls too good for voters to miss.

Telemarketers say this exemption is the height of hypocrisy. "What they've done is taken a huge interstate of commerce and closed it down to one lane and reserved it for themselves," said Searcy, of the American Teleservices Association. Hamilton said, "Since the start of telemarketing legislation they've always exempted themselves because it's their most powerful fundraising tool. It's a very powerful tool, and they know it."

Bulmash, the critic of telemarketing at Private Citizen, says that people who hate sales calls aren't likely to appreciate political calls. "Under the law, George Bush can walk into my home and summon me to the phone as if I were nothing more than his Pavlovian dog," he says. "I don't care if it's fundraising or political or sales. When I cross the threshold of my front door, I'm in my home. That's one place in the world where a person has supremacy, and nobody can present any speech to me. It's a fundamental right. I define the right to privacy as Justice Louis Brandeis did -- it's the right to be left alone."

The ostensible justification for allowing politicians to bother you with their phone calls is that their right to free speech trumps your right to be left alone. Political speech is sacred, they say, and limiting it would have a deleterious effect on democracy. That is not an entirely self-serving argument. It's probably true that the courts would be unwilling to uphold a law that prohibits politicians from calling voters. Courts have already cited the First Amendment in rulings about laws that place limits on charity fundraising calls.

But if politicians and charities have a First Amendment right to call you, don't corporations have the same right, too? Courts generally accord more limited protection to "commercial speech," so it's possible that judges will have no problem with the FTC's new regulations; but several trade groups and companies have filed separate lawsuits against the commission over the new rules, and many say that the law is not "narrowly tailored" enough to protect their rights. The industry says that the government is charged with regulating fraud, but the do-not-call list sweeps up many lawful telemarketing firms into the net. Searcy says that the ban on sales calls "is an unlawful intrusion on legitimate commercial speech that breaks the First Amendment."

"Does anybody like to get a phone call at dinner?" asks Errol Copilevitz, an attorney who's fought many telemarketing laws on behalf of nonprofit organizations. Of course not, he says. But unless the government gives us the opportunity to opt out of all of life's annoyances, why single out telemarketing? "I don't like to be bothered at the airport by people with unusual religious persuasions," Copilevitz says. "But there's some price that you pay for all kinds of freedom."

By Farhad Manjoo

Farhad Manjoo is a Salon staff writer and the author of True Enough: Learning to Live in a Post-Fact Society.

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