FTC says: what's next? (Publisher's Outlook).

Is This What They Want?

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 nor 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 -- nor 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 stare 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 preempt the state lists, The FTC promised pre-empnon, 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 tight 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 nor 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 Stares, as opposed to attempting to justify telemarketing itself standing alone, telemarketin g 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 lifeblood of the American economy. It is nevertheless a flier that every type of marketing, be it door-to-door, product placement in movies, radio jingles, or even that insurance guy at the cocktail parry, 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 stare), 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 ret 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 our to attempt to sells 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 fur 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

[e-mail]

RELATED ARTICLE: Congratulations To The 2003 Top 50 Inbound Companies

I'd like to take this opportunity to extend heartfelt congratuhrions 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 competinon 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,

Join us for the most important event for global outsourcing this year

Nadji Tehrani

The FTC has changed the ground rules for how you will operate, and the Global Call Center Oursourcing Suminir [TM] (GCCOS) June 2-4 in Reno, Nevada is the one place where you can find out how the changes to the Telemarketing Sales Rule (TSR) will affect your business and what we as an industry can do to counteract some of the mote onerous provisions of the TSR. Representatives from the ATA, the DMA and the non-profit coalition who have filed lawsuits against the TSR will be on hand to provide a history of these regulations and what their actions against them have been, But GCCOS will offer you more than just legal information, as there is a full conference program exclusively dedicated to your needs as a teleservices outsourcing executive, plenry of opportunities for networking and a day set aside for golf as well.

Day one of GCCOS tees off with an afternoon of golf at the Arrow Creek Country Club and ends up with a networking reception and opening night welcome dinner. On day two we roll up our sleeves and get down to business with a full day of conference sessions starting with opening remarks and viral industry statistics from your host and conference chairman, Nadji Tehrani, followed by sessions on "The Wall Sr. Perspective/Mergers & Acquisition Forecast for 2003 And Beyond," "Web-Enabling Your Call Center" and ending the morning with a must-attend session called "Legislation Matters Part 1: Outbound Telemarketing: The Legal Case For Survival' This first part of the Legislation Matters session will provide an overview of the history of legislation in our industry and desetiptions of pending regulations by representatives of the DMA, the ATA and the non-profit coalition. The day will conclude with two more important sessions: 'Essential Technology For Teleservices Outsourcers" and "Oursourcing Offshore: The Ultimate Debate." You can then wind down at day's end by attending a reception and touring exhibits and then sitting down at the 18th Annual Top 5OIMVP Quality Awards Reception and Dinner (all attendees cordially invited to attend).

The final day of the conference starts a breakfast followed by three more conference sessions that are viral to maintaining the health of your organization: "Building Your Inbound Business," 'The Make It Or Break It Verdict On CRM: First-Class Customer Service Or Red-Faced Flop" and the second part of Legislation Matters." In addition, there will be case studies/advocacy presentations by outbound customers and an open forum discussion.

As you can see, this is the one contact center event you cannot afford to miss. It is also the only event that is designed for you, the teleservices oursourcer. Plan now to attend GCCOS and learn how to prepare your call center for compliance. We hope you will join us there.

For more information, see www.tmcnet.com/gccos/.

June 2-4, 2003. Siena Hotel in Reno, Nevada.