The Direct Marketing Association Responds to the Federal Trade Commission's Proposed Changes to the Telemarketing Sales Rule April 19, 2002

Summary of Comments

Any regulation to stop reputable telemarketing practices must be balanced with the significant benefits to the economy and the consumer that the teleservices industry delivers.

Adverse Economic Impact

1. The teleservices industry is a major contributor to the U.S. economy and confers substantial benefits to consumers

• Consumer telephone marketing generated $274.2 billion in 2001 sales, accounting for 27.3% of all consumer direct marketing sales. Business-to-business sales accounted for an additional $390 billion
• It is expected that consumer telemarketing will grow by 8.0% per year to an expected of $402.8 billion in 2006
• Outbound telemarketing alone generated almost four percent of all U.S. consumer sales in 2001
• In total economic impact, the teleservices industry generated nearly six percent of U.S. GDP

2. The teleservices industry allows for great diversity in employment opportunities

• Many companies use telemarketing as a first job opportunity when entering the workforce from school or welfare
• In 2001, the telemarketing industry that markets to consumers was estimated to employ 2.5 million workers. An additional 3.4 million are employed by business-to-business telephone marketing
• A recent DMA member survey showed that 60% of teleservices sales representatives are female, of which 25% are single working mothers
• Moreover, 26% are students, 33% are minorities, 5% are handicapped, and 10% of the sales representatives were reported to be immediately off welfare

3. Telemarketing adds competitiveness to the U.S. economy Federalized Taxpayer-funded List Would Not Achieve Objectives

4. For 17 years, The DMA's Telephone Preference Service (TPS) has provided an effective tool for consumers who elect not to receive telemarketing calls

5. As currently conceived, the federalized Do-Not-Call list would not work

6. The Do-Not-Call list violates the First Amendment rights of charities

7. An FTC-administered Do-Not-Call list would be expensive beyond the Commission's estimates

8. No federally established Do-Not-Call list should be created without preemption of state laws

9. The FTC's proposal would create unfair and discriminatory treatment for competitors, some of whom are not covered by the proposed federalized list, such as in the residential broadband market (i.e., cable companies versus telecoms)

10. The Notice of Proposed Rule Making exceeds the Commission's statutory authority

11. The Telemarketing Act does not authorize the creation of a federalized Do-Not-Call list or registry

12. If Congress had intended to grant the FTC authority to establish a federalized Do-Not-Call List, it would have done so explicitly in the Telemarketing Act

13. An exception for contacting customers when a Pre-Established Business Relationship exists should be created if a national Do-Not-Call list is established

14. The proposed federalized Do-Not-Call list unconstitutionally restricts commercial speech

15. The proposed rule contains so many exceptions that it fails to advance its stated interest

16. The proposed federalized Do-Not-Call list is not narrowly tailored and is far more extensive than necessary

17. The proposed additional obligations on telemarketers in instances when consumers initiate calls should be limited to disclosures

18. The prohibition on transfer of preacquired account information should not extend to "Upsells"

19. Use of "predictive dialing" extends beyond telemarketing and creates significant benefits for both businesses and consumers

• The DMA Guidelines provide the appropriate maximum setting for abandoned rates
• Predictive dialing is not within the scope of the telemarketing sales rule as prescribed by the Telemarketing Act

20. The telemarketing of Internet and web services should remain exempt from the TSR under the B-to-B exemption

• The proposal regarding Internet-related services is unnecessary - B-to-B sales of Internet or web services should continue to be exempt from the TSR
• The proposal could create unfair competitive advantages - as with broadband
• Even if the proposal is adopted, B-to-B providers should be exempt from the federalized list

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