Some telecommunications companies in Colorado fear the effects a bill currently being considered by the Legislature could have on their business here. Senate Bill 93, also known as the No-Call Bill, passed out of the Colorado Senate Appropriations Committee on a vote of 9-1, and is headed for the full Senate sometime in April. The bill requires telemarketing companies to pay $500 annually to receive and adhere to a list of customers in the state who do not want to receive solicitations. Telemarketers who are in violation of the bill would receive a $2,000 fine and possibly a court appearance, depending on how the state attorney general’s office decides to handle the case, said Sen. Ken Chlouber, R-Dist. 4, who sponsored the bill. District 4 encompasses Chaffee, Delta, Freemont, Gunnison, Hinsdale, Lake, Park and Pitkin counties.
“I want to make it clear that this is a pro-business bill,” said Chlouber. “And people in your area have a mistaken perception of this bill.
There’s companies that think their sales pitch is so good that people won’t be able to resist their call. And they think they can victimize any citizen with their sales pitch.”
Officials at WorldCom and eight other Colorado members of the Direct Marketing Association say they are opposed to the bill’s method, not its intent. The legislation targets telemarketing companies. Calls from nonprofit, political or research groups are exempt, and fraudulent callers go unpunished by the bill. The Federal Trade Commission reports that consumers lose more than $40 billion a year to fraudulent telemarketing.
“The biggest frustration is that individuals will sign up (for the do-not-call list) and think it’s the slickest thing,” said JoAnn Groff, president of the Colorado Retail Council, a not-for-profit agency that represents retail interests. “But they’ll still get calls during dinner from not-for-profit groups and political campaigns wanting contributions.”
Telecom companies are concerned that the bill limits competition in the industry and does not support telemarketing operations.
For WorldCom, telemarketing is an effective way of doing business, said Gail Garey, a director of WorldCom’s Western public policy. Nationally, about a million customers switched to WorldCom last month as a direct result of its telemarketing efforts, she said. MCI has a telemarketing close rate of 5 percent to 6 percent, compared with the direct-mail success rate of about 2 percent.
If the bill is enacted, it would give an advantage to businesses that have established relationships with customers within the last year, Garey said. This is because the bill allows companies that have pre-existing business relationships with consumers to continue telemarketing to them. A newly established company would be at a competitive disadvantage, then, because it could not use the pre-existing relationship clause to legally use telemarketing services to sway a customer away to its services, said Groff.
“New and growing companies are at a real disadvantage,” said Groff.
A statement released by WorldCom claims the No-Call Bill does not have standards for consumer privacy, so anyone can sign someone to be on the list because the agency does not check the identity of those calling. DMA’s Colorado members, like WorldCom, AT&T, American Teleservices Association, Colorado Cable Television Association, Farmer’s Insurance and AT&T Broadband, said they think SB 93 adds “another layer of regulation designed to inhibit the lawful conduct of an already heavily regulated commercial activity.”
However, Futurecall Telemarketing West Inc., the 18th largest telemarketing business in the nation, which is headquartered in Colorado Springs, said in a previous interview that SB 93 is not a threat because it eliminates time spent marketing to those who do not want to be contacted in the first place.
The party line
Groff said the DMA already voluntarily maintains a list of consumers who have requested that they not be called. Only DMA members are required to use the file, but the file information is available to all marketers, whether or not they are members.
“Any telemarketer that has any credibility whatsoever is a member of the DMA,” Groff said.
There are 65,000 Colorado consumers on the national and local list, said Groff and Garey. They said if legislation “put teeth” into the existing document, from the DMA, then it would be more effective than SB 93.
Groff said an alternative proposal WorldCom and the Colorado Retail Association made was to use DMA’s national no-call list and put Colorado-based enforcement on it, like Maine and Wyoming have done. Right now, the list isn’t a federal list, she said. But Colorado law would need to be changed, so violations of the list would be reinforced with penalties, said Groff.
With local regulation of the DMA’s list, Groff said citizens wouldn’t have to worry about going out of state to get enforcement and help on the telelmarketing no-call issue.
Proponents of SB 93 do not want that, said Groff. Proponents want to create a Colorado-only list. However, by law, most telemarketers must comply with their own list as well as the DMA list. Telemarketers must keep consumers on their do-not-call lists for 10 years.
The DMA has rules and regulations for membership and use of its do-not-call list. If a DMA telemarketer calls consumers on the list, the DMA takes note of the violation of the contract, and the telemarketer can no longer receive its list.
“That’s a big deal because it’s a huge list,” said Groff, implying that businesses would be hurt by misdirecting their calls. “But the Colorado list will be a third list a company will have to have put in their system and the number of lists get very cumbersome.”
The Federal Trade Commission charges up to $10,000 per violation and there is an additional $500 fine per violating call from federal laws. If the DMA list is incorporated into federal law, then the federal penalties would be imposed by local offices. Chlouber said the fines for violating SB 93 don’t penalize telemarketing companies until citizens complain of violations by a telemarketing company three times within 30 days.
Garey said Coloradans who do not want solicitations have a variety of alternatives besides the bill, like not publishing their phone number, or using call blocking or the “no solicitations” announcement developed by Qwest.
She also said the DMA was criticized because consumers did not have an easy way to sign up for the file; however, the DMA now offers online signups at www.the-dma.org/cgi/offtelephonedave.
Groff said she is concern because the bill is unclear whether it applies only to Colorado companies, or if it can “reach out and touch” companies from other states calling Colorado consumers. If the bill affects only Colorado companies, she said, they might move to another state with a better business climate.
For instance, Dave Emerick, regional director for government relations with Household International, said Utah is “the best state for telemarketers.”
“They work hard to attract telemarketing businesses, especially credit cards” he said. “And Utah works hard to keep it that way; they are very business friendly – much more so than Colorado.”
The telemarketing industry in Utah brought in $4,234,349,00 in sales revenue in 1999 and is expected to bring in $6,751,749,000 in sales revenue in 2004. Colorado in 1999 had $9,442,045,000 in sales revenue related to telemarketing and is expected to bring in $15,045,389,000 in 2004, but that is not calculating any effects of the bill.
Arizona, which has a legislature even more conservative than Colorado’s, Emerick said, has telemarketing laws that are friendlier to business. Arizona reaped a higher revenue than Colorado, with $9,475,838,000 in te
lemarketing sales revenue in 1999, and in 2004 is expected to bring in $15,045,389,000. Emerick said Colorado’s legislation concerning the deregulation of interest rates and fees is part of the reason the state lost Nordstrom’s Credit Card Bank to Arizona. Currently there are only three credit card companies in the state and credit card companies are going to be affected by SB 93, he said, because they frequently telemarket their product
Emerick said proponents of the bill claim they’re not trying to go after legitimate telemarketers, but those who commit fraud.
“But this bill goes directly after legitimate companies and doesn’t address fraud at all.”