FTC announces curb on telemarketing

The Federal Trade Commission is scheduled to announce today its long-awaited plan to curb unwanted telephone solicitations: a national do-not-call registry that consumers can easily join, by dialing a toll-free number from their home telephone and then punching in some numbers or by signing up through the Internet.

FTC officials expect 60 million Americans to register when the list becomes operational -- which won't be for at least several more months. It still faces logistical and legal hurdles, including a possible lawsuit by the telemarketing industry, which makes more than 100 million calls a day.

If and when the list is up and running, telemarketers would have to scour it every three months and would be barred for five years from calling the consumers who signed up. Consumers would then have to renew their registration. If they get called anyway, those on the list can call another toll-free number to complain. The FTC would then investigate and could fine telemarketers up to $11,000 for each banned call.

The agency will ask Congress for permission to collect an estimated $16 million in fees from telemarketers to pay for the do-not-call registry -- more than three times the initial $5 million estimate officials gave in January when they proposed it. Sources who have been briefed on the rule said the FTC then plans to charge an annual fee, perhaps as much as $8,000 for a large telemarketing operator, significantly higher than originally estimated.

The agency doesn't expect consumers to notice the impact of the new registry until next summer at the earliest, after the agency seeks temporary funding from Congress to set up the call list and get it running.

The Direct Marketing Association said yesterday, even before the rule was announced, that it believes the FTC action is "unlawful in a number of respects" and plans to "pursue all legal and equitable courses of action to protect the American teleservices industry." Another industry group, the American Teleservices Association, said that consumers buy more than $275 billion in goods and services annually from telemarketers -- about 4 percent of all consumer sales.

If the registry survives a court challenge, consumers shouldn't expect a completely call-free dinner hour. That's because the call list, at least initially, will still allow many unsolicited calls to get through, including those from insurance companies, banks and telecommunications firms, because these industries are not regulated by the FTC.

But agency officials said they hope the Federal Communications Commission will soon revise its telemarketing rules to make these industries comply. In September, the FCC signaled it was considering such a change after receiving an increasing number of complaints about telemarketers.

Regardless of that possible action, the FTC rules would still permit unsolicited calls from charities and politicians, who don't fall under the government's definition of telemarketers.

The agency would also permit firms that have an "existing business relationship" with a consumer to continue to call -- for 18 months after a consumer makes a purchase, or for three months after an inquiry about a product or service.

A large conglomerate, such as AOL Time Warner Inc., where subsidiaries have different names and services, would not be able to claim that an existing relationship in one part of the company allows a telemarketing call from an another part of the firm. Thus, a person with a subscription to Time magazine could get calls from Time and Time-Life Books but not from America Online Inc., sources said.

It's unclear how the FTC rule would mesh with the 28 states that have already enacted laws setting up their own state do-not-call registries. For now, state and federal officials say consumers would have to call both the state and federal lists to make sure interstate and intrastate solicitations are blocked. Eventually FTC officials said they hoped a single call to the federal list would cover all calls. The federal agency is also counting on state law enforcement officials to help police its do-not-call rules.

There are no do-not-call registries in Maryland, Virginia or the District. But officials from some other states with existing lists don't like the federal rule. "We're concerned about confusion, we're concerned about preemption and we're concerned about loopholes," said Jeremiah W. "Jay" Nixon, attorney general of Missouri, where 1.1 million phone lines have been registered on the state's do-not-call list, which was started in July 2001.

After its first nine months of operation, the Missouri registry was generating 50 complaints a day, and Nixon had assigned 38 of his 200 lawyers to investigate them. The state brought 62 legal actions against alleged violators during that period.

As part of the rule, the FTC will also order telemarketers, within a year, to start transmitting caller-ID information when they call, so consumers with caller ID -- about half the country's phone users -- would be able to know who is calling. Telemarketers would also be restricted in their use of automated dialers, the use of computers to call homes in advance of having a salesperson available to talk -- leading to "dead air" at the other end of the phone when you pick it up.