Submission to the ACCC regarding ADMA's request for authorisation of a modified Code of Practice

September 2003 Submission

My 2003 submission remains pertinent.  Rather than repeat the material here, I have included it as a separate document.  Please read that submission first, before continuing below.

Summary

ADMA's Code should not be approved in any way by the ACCC. 

Intrusive communications, especially spam and telemarketing, seriously harm business productivity and privacy in virtually all Australian businesses and homes.  Attempts at self-regulation in telemarketing have been a failure, so telemarketing is now subject to strong government regulations in the USA and other countries. 

Both telemarkeing and spam have many other problems, such as the recipient having no way of verifying the identity of the caller or sender - so leaving recipients open to fraud, divulging of credit card details to criminals etc.  These are highly problematic marketing techniques.  However even if these failings were ignored, the disruption, intrusion and cost they impose upon the public at home and at work would still make it essential to regulate telemarketers and spammers in order to protect the vast majority of people who do not want to recieve such communications.

Spam regulation is difficult, due to its international nature and to fundamental weaknesses in the Internet's email protocols.  However, telemarketing is primarily conducted within a country's borders and so government regulation, combined with the more secure nature of the telephone network, make effective regulation entirely practical.

The success of the US Do Not Call list shows that proper regulation is possible, effective and extremely well regarded by the public.

In the 12 years I have been working on the telemarketing problem, ADMA has always been at odds with the privacy interests of Australian consumers.  They have never, to my knowledge, worked seriously with Australian privacy advocates.  Their aim is to have the ACCC approve their so-called self-regulation to legitimise the intrusive activities of their members whilst avoiding any real restrictions on these activities.

ACCC approval of this Code would constitute government approval of a pernicious business practice, which is a constant burden on businesses and the people at home - and everyone with mobile phones, including children - who are targeted.  There is no consumer benefit in approving this code.

There is always a better and less intrusive way than telemarketing or spam for consumers to learn of new products and services - and for them to donate to charities.

There are powerful privacy reasons why many residential consumers should not use ADMA's opt-out list - and the list only affects a small subset of the companies and charities (or companies licensing the names of charities for a few percent of the "donations") which call them.

Approval would give ADMA unjustified status as an industry self-regulator, and would be used by ADMA and others to show that telemarketing is properly regulated in Australia. 

ADMA's Do Not Call list

After my first submission, I received a response from ADMA regarding the numbers of people on their Do Not Call list.

Several years after its inception, this list only has 4,678 telephone numbers listed.  In the USA, in less than a year, a proper, forceful, government regulation scheme has 55 million numbers (end of 2003 - see FTC press release below).  The US population is about 290 million people (http://www.cia.gov/cia/publications/factbook/geos/us.html) while Australia has about 20 million.  So with a population about 15 times that of Australia, the US Do Not Call regulatory scheme has attracted over 11,757 (55,000,000 / 4,678) more people to join their opt-out list.

Therefore it is reasonable to conclude that in this dimension - number of phone numbers protected - the US government regulatory scheme (after three months of operation) is 783 (11,757 / 15) times more effective than ADMA's ACCC-approved "self-regulatory" scheme, even after several years of operation. 

Since the US scheme covers all telemarketing companies (with exemptions for "charity" and "political" calls), and applies real financial penalties, whereas the ADMA scheme covers only a small subset of telemarketers, and has no direct penalties other than expulsion from ADMA and the regulatory scheme, in the dimensions of industry coverage and effectiveness, it can clearly be seen that ADMA's approach is only a fraction as effective as a proper government regulatory scheme.

The effectiveness of any scheme is roughly proportional to several dimensions of effectiveness all multiplied together:

Proportion of people / phone numbers covered.
Proportion of telemarketers covered.
Effectiveness of penalties for non-compliant telemarketers.

Since the last two, if given a quantitative figure, would probably rank only 5 to 10% of the effectiveness of the US government regulatory scheme, it is reasonable to estimate the relative benefits of ADMA's (currently) ACCC-approved "self-regulatory" scheme and the US government regulatory approach.

1 / 768  x  1/10  x 1/10 => ADMA's scheme is probably  1/76,800 effective at protecting the Australian public as a scheme such as the US Do Not Call scheme would be.

 It is not open to ADMA to claim their scheme is effective protection for the Australian public - it is demonstrably vastly deficient in all important dimensions. 

The ACCC should reject this application because approving it provides no significant public benefit.  Approval would constitute ACCC approval for a deliberately deficient scheme.

The US Do Not Call scheme is a success

Here are the texts of two recent press releases from the US Federal Trade Commission:

http://www.ftc.gov/bcp/conline/edcams/donotcall/mediacenter.html

http://www.ftc.gov/opa/2004/02/dncstats0204.htm

For Release: February 13, 2004 Compliance with Do Not Call Registry Exceptional Over 55 Million Telephone Numbers Registered - Only 150,000 Complaints in 2003 The Federal Trade Commission today released Do Not Call registration and complaint figures for 2003, indicating fewer than 45 companies have received more than 100 consumer complaints. Consumers registered over 55 million numbers through 2003, but have reported only 150,000 possible violations. “The telemarketing industry has shown exceptional compliance with the National Do Not Call Registry,” stated Timothy J. Muris, FTC Chairman. “The Do Not Call program has been highly successful in protecting consumers’ privacy. While we appreciate the high rate of compliance,” Muris added, “we are taking a hard look at the top violators. Assuring compliance with the Registry remains a high priority for the Commission.” In 2003, consumers submitted 150,409 complaints to the National Do Not Call Registry. Some of these complaints did not include the name of a company, and others involved multiple complaints involving the same company name. In sorting the data, there were just over 55,000 specific company names against which complaints were lodged. Fewer than 45 of those companies had more than 100 complaints filed against them. The effectiveness of the Do Not Call Registry was reinforced by a Harris Interactive® survey released today indicating that more than half of all U.S. adults (57%) say that they have signed up for the registry. Ninety-two percent (92%) of those who signed up report receiving fewer telemarketing calls, and twenty-five percent (25%) of those registered say they have received no telemarketing calls since signing up. Humphrey Taylor, chairman of The Harris Poll®, Harris Interactive stated, “In my experience these results are remarkable. It is rare to find so many people benefit so quickly from a relatively inexpensive government program.”

http://www.ftc.gov/opa/2004/02/dncappeal.htm

For Release: February 17, 2004 Appeals Court Upholds Constitutionality of National Do Not Call Registry Statement of FTC Chairman Timothy J. Muris The Tenth Circuit’s ruling represents a major victory for American consumers. In upholding the constitutionality of the National Do Not Call Registry, the court has made it clear that the FTC and FCC can and will continue to protect consumers’ privacy at home. As we saw in last week’s Harris Interactive ® survey, ( See next item - RW.)  the National Do Not Call Registry is enormously popular among consumers who have signed up by the millions. And, the program is successfully working to limit unwanted telemarketing calls. We are pleased that this popular program, like America’s dinner hour, will not be interrupted.

From the Harris Poll:

http://www.harrisinteractive.com/harris_poll/index.asp?PID=439

The Harris Poll® #10, February 13, 2004 Do Not Call Registry Is Working Well More than half of all U.S. adults say they have signed up and they now receive far fewer telemarketing calls or none at all _____________________________________ by Humphrey Taylor The Federal Trade Commission’s National Do Not Call Registry has been remarkably successful. More than half of all adults (57%) say they have signed up and most of these people say they have either received no telemarketing calls since then (25%) or far less than before (53%). Only a few of those who have signed up report getting the same number (5%) or more (1%) telemarketing calls than before. These are some of the results of a nationwide Harris Poll conducted online by Harris Interactive® with a nationwide sample of 3,378 adults who were surveyed between January 19 and 28, 2004. Other interesting findings in this research include: The proportion of all adults who have heard of the Registry has increased from 71% last September to 91%. The proportion of all adults who claim to have signed up with the Registry has increased from 32% last September to 57%. Over 90% of those who have signed up report receiving fewer telemarketing calls, including the 25% who say they have received none, 53% who have received some but far less and 14% who have received some but a little less than before. Knowledge and experience of polls, surveys and Do Not Call Registry Most people on the Registry (68%) do not know if survey research firms and pollsters are allowed to call numbers that have signed up for the Registry. Only a quarter (24% of those signed up) know that they are allowed to call because they were exempted from the "do not call" restrictions. A few people (8% of those who have signed up) mistakenly believe that pollsters are not allowed to call. Two in every five (41%) of those on the Registry report that they have been polled since signing up. So what? In my experience these results are remarkable. It is rare to find so many people benefit so quickly from a relatively inexpensive government program. This successful initiative now raises more questions about the desirability of "do not spam" legislation when, according to other surveys by Harris Interactive, the overwhelming majority of those online find spam very annoying. Humphrey Taylor is the chairman of The Harris Poll®, Harris Interactive. TABLE 1 FAMILIARITY WITH NATIONAL DO NOT CALL REGISTRY "Have you seen, read or heard about the National ‘Do-Not-Call Registry’ list that the Federal Trade Commission has recently set up to go into effect as of October 1, 2003?" Base: All Adults   September 2003 Now   % % Have seen, read or heard 71 91 Have not seen, read or heard 28 7 Not sure/Refused * 2 TABLE 2 REGISTERED FOR DO NOT CALL REGISTRY "Have you registered for the National ‘Do-Not-Call Registry’ list?" Base: All Adults   September 2003 Now   % % Have registered 32 57 Have not registered 67 41 Not sure/Refused 1 2 TABLE 3 VOLUME OF TELEMARKETING CALLS RECEIVED SINCE SIGNING UP ON DO NOT CALL REGISTRY "Since you signed up, have you received any telemarketing calls?" Base: All Who Have Registered   Total   % No telemarketing calls 25 Some, but far less than before 53 Some, but a little less than before 14 About as many as before 5 More than before I signed up 1 Not sure 2 TABLE 4 WHETHER CALLED BY A POLL OR SURVEY SINCE SIGNING UP ON DO NOT CALL REGISTRY "Since you signed up, have you been called by anyone who was doing a poll or a survey and wanted to ask you questions?" Base: All Who Have Registered   Total   % Yes, have been called 41 No, have not been called 51 Not sure 8 TABLE 5 KNOWLEDGE OF WHETHER POLLS AND SURVEYS CAN CALL THOSE ON DO NOT CALL REGISTRY "Do you know if survey research firms and pollsters are allowed to call numbers that have signed up with the ‘Do-Not-Call Registry’?" Base: All Who Have Registered   Total   % They are allowed to call 24 They are not allowed to call 8 Not sure 68 Methodology The Harris Poll® was conducted online within the United States between January 19 and 28, 2004 among a nationwide cross section of 3,378 adults. Figures for age, sex, race, education and number of adults in the household were weighted where necessary to bring them into line with their actual proportions in the population. "Propensity score" weighting was also used to adjust for respondents’ propensity to be online. In theory, with probability samples of this size, one could say with 95 percent certainty that the results have a statistical precision of plus or minus three percentage points of what they would be if the entire adult population had been polled with complete accuracy. Unfortunately, there are several other possible sources of error in all polls or surveys that are probably more serious than theoretical calculations of sampling error. They include refusals to be interviewed (non-response), question wording and question order, and weighting. It is impossible to quantify the errors that may result from these factors. This online sample is not a probability sample. These statements conform to the principles of disclosure of the National Council on Public Polls.