Quotes of the Day
Six-thirty p.m. is a sacred time in American life, but one also often filled with dread. Mom and Dad are home from work, Junior's back from piano and Sis from soccer, and everyone's washed up and ready to eat. We count on dinner as the family hour yet know that at any moment it could be punctured by a phone call from some scripted stranger hawking island vacations or aluminum siding.
If the number of intrusive sales calls you receive seems to be on the rise, that's because it is. Revenue from telemarketing pitches increased 250% from 1990 to 2002, to $295 billion, and is growing today even amid an economy that's flat. Salespeople this year will place 100 million calls daily to homes and businesses, and those who get on hot-prospect lists — usually by buying something — can easily get half a dozen calls a day. The greater call volume means higher blood pressure for most Americans and more bitterly clever responses to the question, "May I speak with [your mispronounced name here], please?"
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Consumers are buying gadgets with names like Phone Butler and TeleZapper to help keep unwanted salespeople at bay. But the callers keep developing new technologies to defeat the gadgets. Federal and state legislators are passing laws to tighten regulation of telemarketers. President Bush recently signed a bill authorizing the Federal Trade Commission (FTC) to create a national do-not-call registry, which anyone can sign up for online beginning July 1 and by phone soon thereafter. Eventually the list will be merged with similar lists maintained by 30 states — a chore that may take up to two years. Companies must begin using the list by Oct. 1. But there are big asterisks in the federal law, which, for instance, exempts from regulation telemarketers for charities and political candidates. And those can be among the most aggressive callers. Last month Amnesty International and Doctors Without Borders were dialing for contributions to aid victims of the Iraq war as soon as President Bush finished his prewar address.
You may pride yourself on never buying anything from a telemarketer — or even letting one finish a sentence. But enough of your neighbors and colleagues respond to phone pitches to make it a lucrative business. Home repairers, mortgage refinancers, long-distance providers and, we should point out, popular magazines like this one have found phone pitches to be among their most cost-effective sales tools. U.S. consumers also unwittingly hand over as much as $50 billion a year to fraudulent callers, who make pleas for phony charities or offer prizes with strings attached or cheap vacations with hidden fees.
Telemarketing has been around almost as long as the telephone, but it didn't take off until the 1980s brought a decline in long-distance prices, along with a powerful technology called the automatic dialer. This device can call hundreds of homes at the same time and then immediately route the unwitting customer to a live telemarketer. When you answer your phone at home and hear nothing but light static, it's often because an automatic dialer has reached you but no agent was free to take the call. An unlisted number used to provide protection, until digital technology allowed marketers to easily gather lists of consumers who have given their numbers to credit-card companies or others with which they do business.
While technology has greatly expanded the telemarketers' reach, it has also given consumers weapons to fight back. Caller ID — which is used by 38% of U.S. households today, up from 30% in 1998--at first allowed users to detect calls from salespeople and other pests. But telemarketers learned to mask their numbers so that they read as UNAVAILABLE or OUT OF AREA on caller-ID displays, and users often answer because they think the call might be an urgent one from a friend or colleague — an impulse that's especially prevalent in these days of orange alerts.
Major phone companies offer services like SBC's Privacy Manager, which for $5 a month screens calls that don't register on caller ID. Anyone with an anonymous phone number is required to identify herself, and if she's a telemarketer, you can press a button to activate a pre-recorded message telling her not to call again — a request that telemarketers are required under federal law to respect (but one that many nonetheless ignore). "Clearly this is a privacy war, and many times the phone companies are the arms dealers," says Robert Bulmash of Private Citizen Inc., based in Naperville, Ill., which campaigns against telemarketing. Like many arms dealers, the phone companies work both sides of the conflict: they avidly sell their services by phone and also peddle their customers' phone numbers to other telemarketers.
The phone companies face growing competition, though, from products like the $30 Phone Butler, sold by Morgan-Francis Inc., based in Fort Myers, Fla., which performs a function similar to that of the Privacy Manager. A more aggressive approach is touted by Privacy Technologies, based in Glenwillow, Ohio, which developed the TeleZapper. A small black box that connects to any phone, the $40 TeleZapper greets each incoming call with shrill tones that resemble the sound of a disconnected phone. When automatic dialers detect this sound, they often interpret it to mean the number is disconnected and hang up. A downside of this device, though, is that it might cause your mom to do the same. Another problem: some telemarketers have either changed their software or bought new dialers that stay on the line even when they hear the zapper's tones.
You might think — or hope — that telemarketers would eventually run out of workers willing to endure constant rejection and abuse. Think again. Expanding global trade, combined with falling prices for international calls, has allowed telemarketers to move call centers to countries where more pliant employees line up for such work. "In the U.S., to work in a call center is not a very glorifying job," but in countries such as India and Mexico, the white-collar environment and relatively high wages have job applicants lining up, says Robert Fabro, president of Hispanic Call Centers, which oversees phone banks in 62 countries and specializes in reaching immigrant populations in the U.S.
Overbuilding in the telecommunications sector has slashed overseas cable costs as much as 80% since 1999, encouraging the flight overseas. Derek Holley, president of eTelecare, which owns call centers in the Philippines, says international lines that cost $40,000 a month in 1999 can be leased for about $7,000 today. The line quality has improved so much that his company can pack twice as many digitized calls, with better sound, into the same number of circuits. "Suddenly price wasn't a huge obstacle," he says, "and the world really was open."
Lately, the fight against telemarketers has shifted toward Washington and the state capitals, inspired by not only constituent complaints but also the personal experiences of lawmakers like Carl Carpenter. Back in 1987, Carpenter's mother Ruth suffered a stroke, making it almost impossible for her to talk. But she always wanted to hear from her adult children and excitedly answered when the phone rang in her small apartment in Plant City, Fla., east of Tampa. Trouble was, most of the calls were from telemarketers. She was finally driven to create a code for her family: whenever they called, they should let the phone ring three times, hang up and then call back.
Carpenter, then a member of the Florida house of representatives, led his state's 1989 adoption of a do-not-call plan in which phone companies were required to put an asterisk in the phone book beside the names of people who did not want to hear from telemarketers. This law was soon modified into a formal do-not-call list. But the law didn't completely shield Floridians because out-of-state telemarketers, often unaware of the list, continued to call. And Florida-based firms started annoying residents of neighboring Georgia — and helped inspire Georgians to pass their do-not-call law.
Politicians in other states have begun to realize how much voters hate telemarketing. In Indiana, attorney general Stephen Carter was elected with help from an ad that showed his daughter spilling milk on the dinner table as Carter is saying, "Not interested" to a sales caller. Carter pushed the state legislature to adopt a do-not-call list, for which more than a million Hoosiers have signed up. And he has aggressively prosecuted companies that call people on that list. Overall, states have collected more than $3 million in fines against telemarketers over the past four years.
Almost all the 20 states that don't have do-not-call laws are considering them. More than 15 million Americans have signed up for the lists, and states that have lists are seeking to strengthen them. Some, like Indiana, ban almost all telemarketing calls, but in most states, certain big industries, such as insurers, have been exempted. One idea being considered in the state legislatures and Congress is a so-called dinner-hour ban that would preclude any telemarketing calls in the early evening, even to people not on do-not-call lists. That includes the usual exemptions, such as the one for politicians, whose solicitations are protected by the First Amendment.
The law President Bush signed in March allots $16 million to set up a national do-not-call list. The law also instructs the Federal Communications Commission (FCC) to adopt similar rules and make industries that the FCC regulates — banking, telecommunications and media — subscribe to the national list. The new federal rules, which took effect March 31, require telemarketers to display their phone numbers on caller-ID devices beginning early next year and also combat dead-air calls from autodialers.
One silver lining in the current economic slump is that it has forced some firms to cut back on telemarketing, just as they have on advertising. Jack Keenan, CEO of Tele Resources in Duluth, Minn., has seen a 40% drop in clients' call-volume requests and has had to cut his staff from 225 to 150 since the end of 2002. Unfortunately, though, fewer cold calls may not mean a reduction in sales pitches. Some firms offer more goods and services when you call them, be it for plane tickets, banking or Internet service.
Lawsuits filed in Colorado and Oklahoma by telemarketing firms are challenging the FTC's jurisdiction in maintaining a do-not-call registry. But telemarketers might not find much luck in court. In 1986, before the days of antitelemarketing laws and TeleZappers, Bulmash of Private Citizen won a suit he filed against a persistent telemarketer, which was forced to pay court fees and the 97¢ it would cost Bulmash to have his number unlisted for a month. "The judge pointed at the defendant," Bulmash recalls, "and said, 'I was called twice last night during the football game by guys like you. Mr. Bulmash, you win.'"
- Perry Bacon Jr. and Eric Roston/Washington