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News > Companies
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Telemarketers get cut off
Industry representatives say the national 'do-not-call' list is a serious setback to small business.
June 27, 2003: 3:37 PM EDT
By Parija Bhatnagar, CNN/Money Staff Writer

NEW YORK (CNN/Money) - As the open enrollment for the free national "do-not-call" registry gets under way Friday, some from the telemarketing industry are shaking their heads in disappointment.

"It might be too early to determine the complete impact of the list for the industry, but there will be repercussions for small businesses," said Lou Mastria, director of public and international affairs with the Direct Marketing Association (DMA), a trade group of 4,700 direct and Internet telemarketers.

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Mastria said he sees several negative outcomes from the Federal Communications Commission's (FCC) support of a nationwide list that consumers can sign up for free to stop unsolicited telemarketing calls at home.

According to the tougher rules endorsed by the FCC Thursday, telemarketers who call registered households on or after Oct. 1 could face fines between $200 and $11,000 a call. Consumers also have the option to sue telemarketers directly for up to $500 a call.

The national list that companies need to obtain also carries a proposed pricetag of $7,200. The Federal Trade Commission (FTC) said it's still in the process of determining the final cost of the list.

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President Bush launched a national do-not-call registry intended to block telemarketing calls. CNNfn's Greg Clarkin reports on how you can sign up.

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Said Mastria, "Last year the industry took in over $100 billion in consumer direct sales from telephone marketing. That's huge. But for small businesses, which account for 80 percent of the telemarketing usage, [the list] is a setback."

Thomas Sullivan, chief counsel for advocacy with the Small Business Administration's Office of Advocacy, expressed the agency's concerns to the FTC late last year.

"The Advocacy is concerned that the overlapping federal and state do-not-call registries may create undue burdens for small businesses," Sullivan said in comments before the FTC in June, referring to the registry's user fees for small businesses and telemarketers.

"I see small business cutting jobs to accommodate the extra costs of running the registry," Mastria added. "They'll lose sales as well. The $7,200 cost is too steep."

Industry watchers say that phone service companies, credit card firms and real estate mortgage providers, all heavy users of telemarketing, could take a hit.

However, several of the phone service providers such as AT&T (T: down $0.37 to $19.36, Research, Estimates), Verizon (VZ: Research, Estimates) and Sprint (PCS: Research, Estimates) appear to be downplaying the development.

"We fully support the national do-not-call list because in the end, it's good for business, and it ensures that consumers will be protected," said Bob Nersesian, spokesman for AT&T.

Incidentally, AT&T's own government solutions business division won the $3.5 million contract from the FTC in February to run the registry.

The FCC has had several complaints against AT&T, but Nersesian said those complaints were not judged as violations.

"We have our own privacy policy that complies with state and federal do-not-call rules. One of the new do-not-call provisions says that if the company has a business relationship with an established customer, the company can still call the customer up to 18 months after the last contact with the person," he said. "Some customers aren't aware of this rule," said Nersesian.

Travis Sowders, spokesman for Sprint, said the company does not depend heavily on telemarketing of its services and therefore isn't that concerned.

James Smith, spokesman for No. 1 local service provider Verizon, said the impact of the national list on new business will be "minimal."

The FCC said it anticipates 60 million households to sign up.

"I think this is terrific for consumers. Telemarketers will simply have to reallocate money to more direct mail, television, radio and print advertising," said Howard Davidowitz, chairman of New York-based national retail consulting firm Davidowitz & Associates Inc  Top of page




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