Big call center job loss feared

FTC's efforts to curb unwanted sales calls may shrink industry

Program takes effect in Oct.

Up to 60 million expected to add phone numbers to 'do not call' registry

April 20, 2003|By Paul Adams | Paul Adams,SUN STAFF

Beginning in July, consumers will be able to add their names to a national "do not call" registry, potentially shrinking what has become a multibillion-dollar business for telemarketing firms across Maryland and the United States.

While that might be good news to those who love to hate telemarketers, somebody on the other end of the phone line is going to be out of a job, industry advocates say.

And businesses that hire call centers may have to retool what many argue is an effective and inexpensive method of selling products or services. Business-to-consumer telemarketing calls generate $275 billion in sales a year, according to industry estimates.

"Our complaint about the rule in general is that the folks might be well-intentioned, but their stroke is too broad and I think they're going to hurt a lot of legitimate businesses and industries in order to give consumers a choice that, frankly, they already have," said Bill Miklas, a vice president for Sitel Corp., a global call center operator based in Baltimore.

Sitel and other telemarketing firms note that the Direct Marketing Association, an industry trade group, already operates a national "do not call" list that consumers can sign up for. But critics say its existence isn't widely advertised, and using the list is voluntary for the association's members.

By contrast, industry and government analysts estimate that as many as 60 million U.S. households, or nearly 60 percent of those with phone service, will participate in the Federal Trade Commission's free "do not call" registry. Registered phone numbers would be placed off limits to most telemarketers making such cold calls.

The registry, which will take effect in October, is part of a long list of new regulations the FTC will impose on the industry this year in a bid to reduce consumer complaints.

The federal agency argues that the registry will make telemarketers more efficient by scrubbing call lists of consumers who don't want to buy products over the phone.

"You can be more efficient with your time if you only call people who want to be called," said Cathy MacFarlane, an FTC spokeswoman. "The industry is by no means going to fall apart."

Advocates of the rule say the new regulations have numerous loopholes that favor businesses. For example, companies with which a consumer has done business are free to call the consumer for up to 18 months.

Charitable and political organizations are exempt, as are industries that the FTC doesn't regulate, such as banks, telephone companies and insurance carriers. However, those businesses are covered by the registry if they hire outside telemarketers, rather than use their in-house staff to make sales calls, MacFarlane said.

The FTC can regulate only interstate telemarketing calls, which means that local companies can still make calls within Maryland's borders without fear of running afoul of the federal regulations.

"There is still a lot of room for sales," MacFarlane said.

Many of those loopholes will close, however, if the Federal Communications Commission adopts a similar regulation, as is expected in coming months. Unlike the FTC, the FCC has jurisdiction over calls made by banks, telephone companies and insurers, as well as intrastate calls. The FCC is in the process of taking public comments on the proposed rules.

It's impossible to know how many jobs might be threatened by the new regulations. Industry trade groups say more than 4.1 million people are employed making an estimated 104 million business-to-consumer sales calls daily.

"I don't know of any industry where you could take away 60 percent of the customer pool and not have it be adversely affected," said Matt Mattingly, director of government affairs for the American Teleservices Association, another industry trade group. "Those that are going to be disproportionately affected are the small businesses, and about 75 percent of our membership qualifies as a small business under the Small Business Administration guidelines."

A 1999 study commissioned by state economic development officials estimated that 21,319 people were directly employed by call centers in Maryland, with many of them in Baltimore County.

The state attorney general's office says it has received 419 complaints about telemarketers in the past three years - a relatively small number considering that the agency gets 10,000 to 12,000 complaints against businesses annually.

Only a small portion of the call centers in Maryland are making the type of business-to-consumer sales calls that are targeted by the national "do not call" registry.

State and industry officials say a large portion of the telemarketers in Maryland are primarily calling a company's existing customers, who are fair game under the new rules, or are taking inbound customer service calls for financial institutions, credit-card companies and retailers.

But even companies that don't anticipate a major hit to their sales are worried about the industry's future.

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