Proposed FTC Changes Hurt Economy, Competition, Entry-Level And Minority Jobs

NEW YORK, April 16, 2002 – The Direct Marketing Association (The DMA) yesterday filed comments opposing many of the Federal Trade Commission’s (FTC) proposed changes to the current Telemarketing Sales Rule (TSR). The DMA urged the FTC to consider heavily the potential adverse impact the FTC’s proposals would have on the nation’s economy, the ability of entry-level employees and minorities to find well-paying jobs and the unintended discriminatory competition that the changes would encourage.

"While we share some of the FTC’s concerns, we believe that many of their suggested changes are unnecessary, ineffective or ill advised," said H. Robert Wientzen, president & CEO, The DMA.

The DMA pointed out that the private sector has been self-regulating this industry since 1985 through The DMA’s Telephone Preference Service (TPS) and other industry guidelines. As an example, The DMA last week cited five companies for not adhering to widely accepted ethical guidelines.

TPS covers about 80 percent of the industry. By contrast, the FTC’s proposed do-not-call list would cover less than 50 percent of telemarketing calls and such a federalized do-not-call registry would not apply to intra-state calls. "At best the FTC would provide a marginal incremental benefit at huge taxpayer expense," said Wientzen.

In 2001, the telemarketing industry, directly and indirectly, employed more than six million Americans. And, 185 million customers purchased $661 billion in goods and services – accounting for almost six percent of Gross Domestic Product (GDP).

"Any new government regulation of this already heavily regulated industry must take into account that millions of jobs and the future of thousands of companies are at stake," said Wientzen. "The proposed changes would especially hurt employment of minorities and women and cripple the ability of nonprofit organizations to raise funds."

In 1999, nonprofits generated the largest portion of their revenues from telephone marketing – almost 42 percent of total contributions or $43 billion.

Furthermore, a recent DMA survey showed that any adverse impact on the teleservices industry would disproportionately affect women, who represent 60 percent of the teleservices workforce, minorities, who represent 33 percent, and students, who represent 26 percent.

The proposed federal regulation would also let Washington essentially pick winners and losers in many markets, such as the broadband marketplace, where it would create unfair and discriminatory treatment between cable and telecom marketers, The DMA told the FTC.

"Again, we call on the FTC to aggressively pursue illegitimate telemarketers," Wientzen continued. "By painting the entire industry with a broad brush, the FTC is punishing the reputable marketers for the sins of the fly-by-night scammers, who give the industry and regulators alike a collective black eye."

The proposed regulations would put reputable marketers out of business, cost jobs and rob billions from the national economy. "Meanwhile, fraudulent marketers simply would move offshore to escape the prosecution," said Wientzen.

The DMA is the leading trade association for businesses interested in interactive and database marketing, with nearly 4,700 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. Included are catalogers, Internet retailers and service providers, financial services providers, book and magazine publishers, book and music clubs, retail stores, industrial manufacturers and a host of other vertical segments, including the service industries that support them. According to a DMA-commissioned study, direct and interactive marketing sales in the United States exceeded $1.86 trillion in 2001, including $118 billion in catalog sales and $30 billion in sales generated by the Internet. The DMA's Web site is www.the-dma.org, and its consumer Web site is www.shopthenet.org.

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Resources for the media are available on The DMA Web site at: www.the-dma.org

Resources include:

1. Map of the economic impact of teleservices in the United States
2. Summary of The DMA comments to the FTC
3. Top-Ten reasons why the teleservices industry should be protected and promoted

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