Dear Reader,
Welcome to Issue 18 of Outbound Focus, a free email publication of Sytel Limited.
This issue, we look at the changing face of outbound dialing in the US, in the light of recently announced federal legislation.
Jamie Stewart
editor@outboundfocus.com
US Feds Regulate Outbound Dialing
1) The Federal Trade Commission (FTC)
In December, the FTC announced the changes to its Telemarketing Sales Rule (TSR) for interstate calls in the US. These are wide-ranging and will have a major impact on outbound markets in the US, and elsewhere. Click here for a PDF version (652 Kb) of the full text of the changes.
In this issue, we are going to summarise the changes on the dialing front and look briefly at some of the other main provisions.
- Dialing
In the FTC’s own words – but with some changes to their order…”The Commission has determined to prohibit abandoned calls from continuing without regulation, and has created requirements that, in effect, closely govern the use of predictive dialers. Under this approach, consumers will benefit from a substantial reduction in the number of abandoned calls they receive, but telemarketers will not be deprived of a large part of the efficiency benefits that accrue from the use of predictive dialers.”
a) Abandoned Calls
“The seller or telemarketer must employ technology that ensures abandonment of no more than three percent of all calls answered by a consumer, measured per day per calling campaign… An outbound telephone call is abandoned if, once the call has been answered by a consumer, the telemarketer fails to connect the call to a sales representative within two seconds of the consumer’s completed greeting… The…three percent abandonment rate is measured per day per calling campaign… A telemarketer running two or more calling campaigns simultaneously cannot offset a six percent abandonment rate on behalf of one seller with a zero percent abandonment rate for another seller. Each calling campaign must record a maximum abandonment rate of three percent per day.”
Comment:
Note the new definition of an abandoned call. Abandoned calls, as in say Direct Marketing Association (DMA) rules, in the sense of disconnecting an answered call, with no message, are no longer allowed. Reaction to the 3% will be mixed. Because of the scale of past abuses, many outbound commentators were expecting the FTC to set a zero rate. With well-designed outbound operations, the larger outbound telemarketing agencies especially can still get considerable benefit from predictive dialing.
b) Dead Air Provision and the Playing of Messages
“Based on the record established on this issue – that use of predictive dialers inevitably entails some dead air and that two seconds of dead air allows predictive dialers to impart significant efficiencies – the amended Rule provision allows two seconds of dead air before a call answered by a consumer will be considered ‘abandoned’… Delays of more than two seconds before connecting the call to a sales representative are prohibited… Whenever a sales representative is not available to speak with the person answering the call within two seconds of that person’s completed greeting, the seller or telemarketer must promptly play a recorded message…”
Comment:
Note that as soon as the two second point is reached, the message is deemed abandoned and a message must be played. This part of the rule assumes that ‘a dialer’ will always be listening on the line to determine when the greeting is complete. Dialers don’t always do this, which means that a standard period will need to be assumed for a greeting. This is in line with a similar provision in the rules still being finalized by the California Public Utilities Commission (CPUC). See item 2 below.
It is not clear from the final transcript of the new rule why the FTC thinks that the use of predictive dialers ‘inevitably entails some dead air’. This ‘legitimization’ of ‘dead air’ seems to place them firmly in the camp of allowing/encouraging dialers to do answering machine detection. When consumers were faced with this in the past, they could just hang up. Now that ‘do-not-call’ lists are coming at both a federal and a state level, consumers who don’t fancy any ‘dead air’ (and there are lots of them) have a choice that shields them from such calls. Not surprisingly, some privacy evangelists are welcoming this part of the new rule as a way of encouraging consumers to join ‘do-not-call’ lists.
c) Early Hangup
“The seller or telemarketer must allow each telemarketing call placed to ring for at least fifteen seconds or four complete rings before disconnecting an unanswered call… This ring time standard will give consumers, including the elderly or infirm who may struggle to get to the telephone, a reasonable opportunity to answer telemarketing calls while preventing the undesirable result of consumers’ privacy being disrupted by ringing phones with no caller present on the other end of the line.”
Comment:
This has been quite a common dialer practice in the past, overlooked so far by legislators in individual US states. This follows DMA practice and gives consumers a reasonable time to answer the phone before a dialer hangs up. - Do-Not-Call
As expected, the FTC confirmed that it will be issuing contracts to manage a national Do-Not-Call list. It is anticipated that
“full compliance with the ‘do-not-call’ provision will be required approximately seven months from the date a contract is awarded to create the national registry”. - Caller ID
A grace period of one year has been given before provision of Caller ID becomes mandatory. - Exemptions
The TSR is aimed firmly at telemarketing, but there are a number of exemptions. Three of the significant ones are market research, collection activities and fund-raising made directly by charities.On an interstate basis all these activities remain outside the ‘do-not-call’ net, and are not subject to the compliance rules on predictive dialing.
What to Expect in 2003
In the US:
We expect that the lead of the FTC is likely to be followed by the Federal Communications Commission (FCC) and also individual states (for intrastate calling). The extent of non-agent calls will fall but, particularly because of exemptions, it won’t fall either as far or as fast as consumers would like. So a key reason why people join ‘do-not-call’ lists will be outside of the control of responsible telemarketers (see also our comments about ‘dead air’, above).
Consider this. A call center, whose campaign is being run outside the telemarketing rules (collections, fund raising, market research, political, etc.) calls a consumer. The call center gets through but in the process the consumer gets abandoned calls, ‘dead air’, etc, which are clearly well outside the rules. What can the consumer do to reduce this class of call? Well, he may just join the proposed national ‘do-not-call’ list. And the telemarketer who was going to call the same consumer, working within the new rules, can no longer do so, although the other call center is free to do so again – and again.
It might be reasonable for non sales-related activities to be excluded from ‘do-not-call’ compliance but it is unreasonable that they should be allowed to continue with their old dialing habits. Expect the US telemarketing community, rightly, to be pretty vociferous on this in 2003.
Some outbound business may be tempted offshore from the US, as a way of avoiding the new rule(s). At the first sign of this, we expect some member of congress to win himself some votes by seeking amendment to FTC/FCC rules to allow US-owners of calling lists, and/or carriers responsible for such calls into the US to be regulated.
Elsewhere:
The actions of the FTC/FCC will prompt other countries to look more closely at the way in which they monitor their outbound dialing markets. With the exception of Canada, no other country has anything like the scale of outbound activity and consumer concerns that the US has had, and in most cases any actions will be measured rather than rushed. We will be commenting further on other countries in subsequent issues.
2) The California Public Utility Commission (CPUC)
In California, the CPUC has published a working paper (Word format, 112 Kb) for comment on its new dialing rules, with recommendations in line with those of the FTC. Because of the failure of the original bill (AB870) to encompass it, the CPUC is still powerless to rule on the issue of early hang-ups (see the 15 second minimum ring time in the FTC rule, above). We believe that it would be unwise to expect this “loophole” to remain open for too long and we will keep you posted on any developments in this area.
Disclaimer
We have used our best efforts in interpreting the new FTC rule for you but cannot be held responsible for any errors or omissions. All readers for whom the new rule is relevant are advised to consult this PDF file (652 Kb) at the FTC web site.
We have touched on some parts only of the new FTC rule and would welcome contributions from anyone wanting to comment on other aspects of it.
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