Comments to the ACCC on ADMA's proposed Code

For the Australian Competition and Consumer Commission, with a formal accompanying letter, in response to the ACCC's Draft Determination on ADMA's Code of Practice.

20 October 1998 Robin Whittle  11 Miller St Heidelberg Heights Vic 3081
Ph 03 9459 2889  Fax 03 9458 1736  WWW: http://www.firstpr.com.au  Email rw@firstpr.com.au

This submission is available on the Web from http://www.firstpr.com.au/issues/tm/ and is being supplied to the ACCC in printed form, with photocopies of the ADMA 1992 survey documents and a printout of strategy.doc.

1. To show why the ACCC's consideration of ADMA's application should be revisited and why the matter should be discussed more widely and publicly, starting with a meeting of interested parties.
2. To document for advocates, direct marketers, and other interested parties (such as market researchers) some of the problems caused by outbound telemarketing and how these can and should be solved by appropriate government regulation and/or self-regulation.
3. To propose in detail (Appendix 2) an Australia-wide independent opt-out scheme for outbound telemarketing, which is elegant, cost-effective and has no obvious privacy problems - in contrast to the extreme privacy problems of ADMA's current opt-out schemes.  A similar scheme could be implemented for direct mail, and another one for market research calls.

        - Robin Whittle

Contents

• Key issues in brief
• Appendix 1  ADMA's 1992 Survey showing at least 70% of people find outbound telemarketing unacceptable
• Appendix 2  Implementing a national, independent opt-out scheme for outbound telemarketing
• Appendix 3  Where does outbound telemarketing sit in the scheme of things?
• Appendix 4 Why outbound telemarketing should be minimised or eliminated
• Update history

Key issues in brief

• While some aspects of the ADMA's code may have benefits for consumers - in respect of direct mail and purchases made via inbound telemarketing - the code should not be approved by the ACCC because to do so would be to legitimise widespread telemarketing and so cause serious costs and other problems for virtually all consumers and businesses.
• Outbound telemarketing has no advantages for the public whatsoever, compared to other less intrusive means of marketing and selling.  (See the diagrams and strategy.doc in Appendix 3 ) In particular it holds no advantages for the recipient over conventional advertising, direct mail, web-sites etc. with the prospective customer calling the vendor, at their convenience, via a free-call number.
• Outbound telemarketing is an unfair, intrusive, exploitative business practice which imposes costs on many people who have no choice in the matter. It is an expensive method of marketing, the costs of which must be recovered by the higher prices / "donations" which can be gained from the small number of people who respond positively.  Its sole attraction for the few traders and charities who use it is that it is a highly manipulative means by which they can talk some people into parting with their money.

• Outbound telemarketing is a burden on all the consumers and businesses who are targeted - and so is a burden on the entire Australian economy.  The inability of businesses to defend themselves from the lost time and aggravation of outbound telemarketing is arguably anti-competitive.
• The cost in terms of inconvenience, wasted time, privacy intrusion and upset cannot be justified even if outbound telemarketing was in some way efficient, productive or made a positive contribution to the nation's productivity - but it does not.
• The total economic costs from outbound telemarketing to affected individuals and businesses and charities is difficult to estimate.  Since the costs are borne by people, businesses and charities who have no choice in the matter, outbound telemarketing is arguably anti-competitive, and certainly something which should be regulated.  The economic costs include:
• The pressure of telemarketing and direct mail is probably responsible for the majority of the million or so residential subscribers who pay Telstra $32 per annum not to list their number or address in the white pages.  Since few direct mail operations work from the white pages, while many telemarketers do, and because telemarketing is intrusive and almost universally hated, it is reasonable to estimate that outbound telemarketing imposes such a burden on residential telephone customers that they pay over half of this $32,000,000 pa. in an attempt to avoid it.
• The social and economic cost of a lower proportion of the population being listed in the White Pages - for instance creating significant inconvenience, including in emergencies, for those who wish to look up the number of "silent line" people for legitimate reasons.
• Increased costs to Market Research companies trying to gain respondents to telephone surveys, and reduced accuracy of the result due to a larger proportion of people not giving their views.  Telephone surveys are a major part of this $400 million pa. industry ( estimate from AMRO: http://www.mrsa.com.au/assocorg.htm ). Market research is a vital and productive industry which makes crucial contributions to business, social research and good government - and telemarketing is a major problem for it.  See: http://www.mrsa.com.au/code8.htm
• Increased costs to businesses who are targeted by outbound telemarketers - both the time spent by receptionists trying to keep telemarketers  from talking directly to managers and other company officers, and the time, distraction and upset caused to those people when the telemarketers do break through the initial line of defense. Most businesses have a sign at their door such as "Absolutely No Hawkers" - but the phone number and street address of the business must be in both the White and Yellow Pages directories, and so is accessible to telemarketers.  Currently businesses have no way of expressing or enforcing their desire not to receive outbound telemarketing calls.  (I got such a call from an electronics business as I write these comments! The caller wanted to know my email address so they could email me as an alternative to being on their mailing list.  I have never dealt with the company before and explained that I was happy to read their advertisements in the the magazines I receive . . and that this call was interrupting my work . . . )
• Increased costs to all businesses in establishing their bona-fides with consumers who are increasingly suspicious of manipulative, un-trustworthy businesses after being repeatedly targeted with telemarketing calls.  (For instance in the USA where some homes receive three or more outbound telemarketing calls per day - despite never responding positively to any of them.)  Thus a very small proportion of businesses target millions of consumers and so cause increased levels of suspicion about businesses in general, which are often not deserved and which involve non-telemarketing companies in increased efforts and costs to overcome.  This is arguably anti-competitive.
• Charities which conduct outbound telemarketing themselves face two significant, direct costs.  Firstly the costs of the calls, labour and facilities to conduct the campaigns themselves.  Secondly their loss of respect in the eyes of the public because they are seen to be using an intrusive, very costly, means of raising funds.

All charities are affected by the inefficient and cynicism-engendering practice of charity telemarketing, but there are even greater problems caused by the commercial operators who license a charity's name anc call people as if they were that charity, seeking donations.  Such companies can retain a very high proportion of the money received and pass only a fraction of it on to the charity.  In one instance in 1995, a company licensing the name of the CanTeen (Teenagers with Cancer) charity called me as if it was CanTeen and tried to sell me a pen and letter opener set for a $39.95 "donation" - with an invoice from the charity.  I spoke with the caller's supervisor and she told me that there was no mention in the call or the paperwork that any other organisation than the charity was involved.  She also told me, without any apparent shame, that only $2 of the $39.95 "donation" actually went to the charity.
• Whether it is charities or businesses doing "charity" outbound telemarketing, the cost to all charities - including those who do not use telemarketing - is immense.  Charities compete within a finite pool of generosity and money.  Outbound telemarketing siphons a great deal of the money "donated" away from the charities themselves, and it reduces the pool of generosity as the public becomes cynical about charities in general.  The effects are borne by the great majority of charities who have no involvement in outbound telemarketing, so it is arguably anti-competitive, and certainly a case of unfair or false trading for donors to be unaware of what proportion of their "donation" actually benefits the charity.
• The cost of outbound telemarketing calls - including fax - calls tying up the telecommunications services and equipment of targeted people and businesses.
• Telemarketers who leave messages on answering machines and voice mail  and so induce the recipient to make further calls which cost them time, money and upset.
• Costs and difficulties to business making legitimate outbound calls - such as reminding credit card customers of late payments - because such calls are often seen by the recipient initially as an outbound telemarketing call.
• Over time, the development of a generalised distrust of people you don't know - by being peppered with manipulative, supposedly polite and friendly, telemarketing calls. (For instance in the USA - where outbound telemarketing is much more prevalent, due in part to the zero cost of local calls.)
• This distrust involves an erosion of one of Australia's greatest social and economic assets - our open and trusting nature.  The social importance of maintaining this nature is incalculable.  The economic importance - to tourism, food and cultural export industries - is obviously immense.
• The number of outbound telemarketers is relatively small compared to the disruption they cause.  The sales and "donations" which result from their calls are a very minor component of business and charity activity.  Outbound telemarketing revenues have never been estimated reliably since without a large-scale research project there is no way of determining who is doing it .  Figures quoted for the turnover of "telemarketing" are often very high indeed - this may well be the case, but the revenue generated by "inbound telemarketing" - which includes a huge range of perfectly normal and non-privacy-threatening business practices - is probably hundreds of times that generated by outbound telemarketing. There is no industry sector which requires outbound telemarketing.  If outbound telemarketing disappeared overnight, the jobs lost would be more than compensated for by increased employment due to increased national competitiveness resulting from lifting the burden of millions of unwanted, aggravating, telephone calls.  All those new jobs would be more productive and enjoyable than being an outbound telemarketer.  A day's work for an outbound telemarketer calling businesses will result in more than a day's lost productivity in the businesses she or he calls.
• The "predictive dialer" systems used by outbound telemarketers dial more calls than there are operators.  This is on the basis that on average, a certain proportion will be answered within a given time.  At times, more calls will be answered
• ADMA's proposed Code, if legitimised by ACCC approval, will lead to an increase in outbound telemarketing to homes and businesses - including to mobile numbers:
• 362 days a year.
• From 8AM to 9PM (but could be any-time for receivers in different time-zones or with international roaming).
• With a completely inadequate opt-out scheme.
• By human callers and . . .
• with completely automated systems which play a recording to the hapless recipient. This has happened to a limited extent in Australia and is not uncommon in Canada and the USA.  It is likely to be a cause of extreme upset for the recipient, and to cause confusion and concern to the elderly, to children who answer the phone, and to those recipients with poor English skills.  Such calls would also result in voice mail and answering machine messages.

• ADMA has long known, through its own research in 1992, that at least 70% of the population find outbound telemarketing unacceptable.  The true figure is probably between 95 and 99.9 percent.  Yet it did not make this research available to Austel or the ACCC.  (See Appendix 1.)
• Therefore, outbound telemarketing, except to those who have previously indicated they are happy to receive such calls, is incompatible with:
• The objectives of this code.
• The responsibility of the ACCC to protect consumers.
• The requirement in Section B clause 19 that ADMA members must not engage in unfair or unconscionable conduct.

• To the extent that it involves systematically making thousands or millions of calls which are against the wishes of the recipients, any level of telemarketing is unacceptable.
• Outbound calls to mobile phones are likely to be extremely disruptive for the recipient.  Given that there is no way of knowing where the mobile phone is, an analogue phone could be within a three-hour range of time zones in Australia.  GSM phones may be internationally roaming, and so any call to them may be received way outside the supposedly "acceptable" 8AM to 9PM.  Calls to roaming mobile phones also involve high costs for the recipient.  Telemarketers who leave voice messages may cause direct costs for recipients as well.  Outbound telemarketing calls to mobiles should not be allowed under any circumstances.   If ADMA can induce a number of mobile phone users to identify themselves as happy to recieve such calls, then by all means, ADMA members should be allowed to call them.  The high cost of mobile telephony should fall - not least due to the efforts of the ACCC - and so the current cost reasons for most outbound telemarketers (apart from Telstra, Optus etc.) avoiding mobile numbers, will not persist.
• The current level of outbound telemarketing in Australia is completely unacceptable and unjustifiable - and is a direct result of the failure of governments to systematically protect the public in this field, in which individuals and companies cannot protect themselves.  We should regulate it now, before a number of factors cause the incidence to rise to US levels.
• New technology makes the cost of human operated outbound calls significantly lower - so an increase in outbound telemarketing calls can be expected unless proper regulatory steps are taken.  The new methods include:
• Cheaper long distance communication costs, enabling an outgoing call centre in one city or regional centre (or using individual callers at home) to use ordinary telephone calls to reach customers well beyond the local call zone.
• The increasing adoption of ISDN services which enable short local calls for 18 cents or so.
• The increasingly competitive telecommunications system (thanks to the ACCC and the Government) giving carriers and service providers the opportunity to offer local calls so telemarketers and other large customers at lower rates than available to most customers.
• The use of "Internet telephony" and other systems, such as compressed voice over Virtual Private Networks to gateways in the major cities, to direct outgoing calls via local calls, where the caller is located far away and possibly in an overseas country which has much lower labour costs than in Australia.

• ADMA is an organisation which in some important respects is hostile towards privacy protection for consumers.
• ADMA proudly implies on its web site that it influenced the Prime Minister's surprise decision (without consulting Cabinet, the Attorney General or the Privacy Commissioner) to abandon the long developed, bipartisan supported, plans for extending the Commonwealth Privacy Act to cover corporations.
• The organisation, on its web site, says it has been "successful in protecting members' freedom to contact customers using a variety of direct response media" - which to the consumer means the denial of their freedom to defend themselves from intrusive and unwanted communications from potentially thousands of companies, charities and companies who license the names of charities.
• ADMA has denied knowledge of its own research regarding how unacceptable outbound telemarketing is.
• Its Code and many aspects of its operations seem designed to give the appearance of supporting privacy, whilst in fact allowing direct marketers to continue their privacy threatening practices.
• The ACCC seems not to have considered the involvement of an organisation which seems to be much more representative of telemarketers (both inbound and outbound), the Australian Telemarketing and Call Centre Association. http://www.ata.asn.au/
• ADMA's "Do Not Call" and "Do Not Mail" services have serious privacy problems, which can only be overcome with a separate, better designed and completely independent scheme.  To prevent phone calls, the individual must give their name and address as well as their phone numbers.  All this information will be distributed to all of ADMA's 370+ members.  No-one who values their privacy should consent to this.  It would be completely at odds with many people's desire to keep their address and phone number secret and in no way linked with their name.  It is also at odds with many people's genuine need not to allow their name to be used in any such context - these include public figures, people on witness-protection schemes and people who simply want to be left alone.

 

 

A proposal follows (Appendix 2) for an elegant, national, independent, scheme for opting out of out of telemarketing.  It is the government's responsibility to ensure that such a scheme is established and enforced - whether by legislation and/or by industry self-regulation.  Individuals and businesses have no way of protecting themselves from telemarketing - but a well designed and enforced centralised scheme will offer excellent protection.  Many Australians are puzzled by the complete lack of action on the government's part to fulfill their responsibility in this field.

• Both ADMA and the ACCC's Draft Determination make frequent mention of such things as "promoting a culture among direct marketers of conducting their businesses fairly, honestly, ethically and in accordance with best practices".  Yet outbound telemarketing is clearly unfair and unethical when the telemarketer know that most of their calls are intrusive and against the recipient's wishes  - especially when the telemarketer does not welcome receiving telemarketing calls themselves.  Best practice with outbound telemarketing would be as follows:  Conduct a direct mail and advertising campaign - perhaps with prizes as inducements - to gain the consent of individuals who are happy to receive outbound calls.  Then call only the people on that list.  ADMA prides itself in the value and accuracy of lists, and it pretends that outbound telemarketing is in some way acceptable to the public - so best practice would be to only call those who have stated that they are happy to receive such calls.  If telemarketers were properly regulated, this is what would happen - the idea of an opt-out list is really a sop to the telemarketers.  By rights no-one should have to take such special action to maintain their privacy.  Stealing a person's time and attention is not far removed from stealing their personal information or their property.  We don't think it reasonable that citizens should have to take action to opt out of the attentions of the burglary industry.  Nor should people have to take special steps to maintain the privacy of their personal information, or to protect themselves against the deliberate actions of telemarketers who are fully aware of the intrusion and upset their calls cause.  Best practice for outbound telemarketing is opt-in - to restrict it to people who have expressed their desire to recieve such calls.
• ADMA's Code provisions on electronic commerce are too vague and weak to be meaningful.  There are no provisions to stop members sending unsolicited and unwelcome messages to Usenet newsgroups or to millions of people's email accounts.
• ADMA's Code adopts a curious and rather narrow definition of "Direct Marketing" - one which seems more appropriate to "Distance Selling".  The series of "and"s in Appendix 1 clause 3.5 rules out:
• Door-to-door selling  - which is, by ordinary definition, certainly a form of direct marketing.
• Person-to-person (friend-to-friend) marketing - such as that practiced by the adherents of Amway (an ADMA member).
• Any form of direct marketing in which a successful transaction does not involve recording the transaction details "for further marketing purposes".
• Any activity - such as fundraising (or for instance the latest trend of calling not to ask for a donation but to ask if you will sell raffle tickets on their behalf!) - which does not involve a "contract for the sale of goods or services".

• Another problem of definition and scope is the complete lack of reference in ADMA's code to fundraising, except in Appendix 1 where the word "fundraiser" is defined.  Fortunately the ACCC correctly sees this code as applying equally to fundraising and to sales activities. (ACCC Draft Determination page 8 paragraph 2.1).
• The value of having telemarketers numbers displayed on the Calling Number Display services of the people they call is extremely limited indeed.
• Firstly, few people have CND, and there should be no expectation of people having to pay for such a service in order to maintain their privacy.  CND is a deeply flawed "service" with tremendous privacy problems, and no real privacy protection benefits for the user of the service - unless they decide not to answer calls without displayable numbers, which is impossible and/or unreasonable.
• Secondly, the technical nature of CND is that the number displayed is of the telephone line the call is made on.  A company may have dozens or potentially hundreds of lines for outgoing calls.  The PABX routes calls to these lines in no particular order.  The numbers of these lines are likely to bear no relation to the published number or numbers of the company or its in-dial extensions.
• Even if the displayed number did match the company's directory listed number, how is a consumer to know at the time of the call that the call is from a telemarketer, or which company it is from?  Reverse directory CD-ROMS are available (but not from Telstra for residential customers) but are expensive and should not be encouraged - for very good privacy reasons.
• Outgoing lines of a PABX typically do not receive incoming calls, so if the person rang the displayed number back - for instance to complain or to order a product or service - their call would probably result in an out-of-service tone.

(Four appendices follow.)

Appendix 1  ADMA's 1992 Survey showing at least 70% of people find outbound telemarketing unacceptable

 

Key results from Question 9.

For those reading this via the web, please refer to the page at:  adma-survey/

The Paper edition for the ACCC contains a print out of that page and photocopies of the survey results pages I received from ADMA for the nine question survey of 1,204 people.
 
 

 

 
 
 

Appendix 2  Implementing a national, independent opt-out scheme for outbound telemarketing

This is based on work I did in 1992 as part of my submissions to the Austel Privacy Inquiry.  The same principles could apply to:

• A direct mail opt-out list - where postal addresses are concerned instead of telephone numbers.  This would make the main and published databases significantly larger, but the principles remain the same.
• A market research opt-out list.  This would be identical in principle to the telemarketing list, and it would make a lot of sense to implement the two schemes with a single main database and a separate published database for each type of call. A significant proportion of people - probably a majority (and an increased number if telemarketing is controlled) - are happy about partaking in telephone surveys.  So while both kinds of calls are not welcomed by some proportion of the public, they are regarded very differently by a significant proportion of people, probably a majority, and so should be regulated in separate and independent ways.
• A "direct email" opt-out list.  This would be the same in principle, but I do not believe it would be worthwhile.  The first reason is that email is an international system with very low costs - so controlling mass emailings to and from Australians will make little impact on the problem.  Secondly, there are automated ways people can protect themselves against mass commercial email (or have their ISP protect them) - something which is not true of telephone calls.

The system is explained in terms of its administrative framework, its functionality to the public, its functionality to telemarketers, and how the operator of the scheme would communicate with these two groups of people and with the telephone companies, or a centralised numbering database.

Administration

There is a single system to cover all of Australia - for mobile and fixed telephone numbers.  (Arguably telemarketing calls to mobiles should be banned entirely, since even the ADMA would have difficulty showing that more than a fraction of a percent of mobile phone users find such calls acceptable.)

It is administered by a single body - which is not a direct marketer or direct marketing association.  One potential organisation to administer the scheme would be the Telecommunications Industry Ombudsman   ( http://www.tio.com.au/ ).  This is quite different from its core function - but it is well placed and well known and, I believe, could take the role on a contract basis.  Another potential operator would be whoever runs the forthcoming  Integrated Public Number Database (IPND) being developed by ACIF's OCRP/WC 6 Committee.

There are several funding options - including by the telecommunications carriers (who would gain much-needed PR and privacy points for this), ADMA, the telemarketers who use the list, or some other method.  The scheme would be simple and not cost a lot, so it could be funded by a small payment by each individual or business who opts-out, but this goes against important principles, would detract from its value, would add greatly to the administrative costs and would be a shameful outcome in a telecommunications industry which is awash with billions of dollars of revenue.  (Perhaps a way of funding it is to charge business phone users, but not residential users, for registering their number.)
 

Functionality for individuals and businesses

Individuals and businesses who did not want to receive outbound telemarketing calls would register their phone numbers with the scheme - which would involve them proving in some way that the phone numbers were theirs.

They would renew their registration every three years (for example) - and ideally would receive a reminder from the scheme before this time arrived, so they did not forget, and so they would have a form, or an email address or a web form which would make it easy for them to re-register their numbers.

The scheme, in combination with regulations and/or direct marketer self-regulation, would work to prevent all outbound telemarketers from calling the registered numbers, except where the targeted person had previously agreed to such calls from a specific company.

If individuals or businesses found that they still received telemarketing calls, they would be able to report the problem to a regulator (in the case of legislation - though legislation and government regulatory bodies are not in fashion at present) or the industry self-regulatory body, such as ADMA.  To do this, they would need to find out the identity of the caller.  In most cases, this would be possible, since only the most recalcitrant telemarketers would not give their company's name to someone who wanted to identify them.  An alternative would be to use "customer activated call trace" - which is commonly available in North America, but not yet in Australia, except with ISDN services such as most large PABXs.  (See:  http://www.ozemail.com.au/~firstpr/mct/ )  Such a call trace service is technically supported by the exchanges of Telstra, Optus and other carriers - but they have so far lacked the will or regulatory impetus to introduce it.  Customer activated malicious trace has nothing whatsoever to do with CND and can be activated without prior notice from any telephone.  It is primarily intended for malicious calls, but is quite applicable to telemarketing calls.   It does not reveal the caller's number to the recipient - but captures it and forwards it to investigators.

Any telemarketer found to be systematically ignoring the scheme's list of "do not call" numbers would face sanctions.
 

Functionality for telemarketers

The scheme would have a variety of ways of interfacing with the telemarketer's operations to enable them not to call numbers on the "do not call" list.

The simplest and most common would be for the telemarketer to download the "published" database - which contains the list of numbers not to call - or to download a part of that database, such as the 03 xxxx xxxx range.  This would be via the Internet, or it could be delivered on one or more floppy disks.  (A technical discussion follows on how this data can be compressed into a small format for distribution.)

There needs to be some other ways that smaller telemarketing "organisations" can access the "do not call" list.  This includes individuals who are planning to cold-call a list of numbers they obtained from any source whatsoever - such as from the White or Yellow Pages printed directories or from the stubs of a raffle book. Options include:
 

• A web-based query form by which one or more numbers can be entered (such as with a cut-and-paste manual operation, by manual typing or with suitable software) and the system would indicate which of those numbers were registered on the "do not call" list.
• Similarly a phone-based service, which the user would enter the numbers to be queried with tone-dialing (manually or using their modem or computer-connected-phone and the dialing software they are going to use) and the system provides a voice response indicating whether each number is on the "do not call" list or not.
• A "direct" computer-to-computer approach so the telemarketer's computer could send each number and get a response back from the system directly.  This would be straightforward via the Internet.  Several thousand numbers a minute could be checked like this.


The key point is that the telemarketer only has access to the published "do not call" list of telephone numbers, and not to the associated names and addresses.

Quite apart from the regulatory reasons for checking numbers, there would be the incentive of saving a local call cost instead of making a call which would be quickly and probably angrily rejected.
 

Overview of the system's operation

The operator of the scheme would interact with three groups of people or companies:

1 - The public: individuals and companies wishing to register their number.

2 - Telemarketers, or anyone who wanted to check a number to see if it was "do not call".

3 - The telephone companies, or at least the Integrated Public Number Database (IPND).

The phone companies or IPND would inform the operator of the numbers of all telephone services which were terminated or changed to a new customer.

The operator maintains two databases - the "main" database and the published "do not call" database which is automatically generated at regular intervals, such as on a weekly basis,  from the "main" database.

The operator keeps the "main" database confidential.  It consists of a record for each telephone number which has been registered.  Each record contains the telephone number, name and contact details for the customer who "owns" it, and the date at which they last registered this number.

Periodically, say once a month, the main database is scanned for entries which are nearing their three-year limit - to generate mail outs, emails or whatever to remind the owners that they should re-register the number if they still do not want to recieve telemarketing calls.

Numbers which are not re-registered after three years are removed from the main database.

A person could de-register their number if they wished - but the operator would need to make very sure that this was a legitimate request from the right person.

When the operator receives notification from a phone company or IPND that a number's service has been terminated or changed to another customer, then the record for that number is deleted. (Of course an audit trail is kept of all transactions and changes, so mistakes can be corrected.)  This system has no problem working with local number portability, since if a customer retains their number as they change to another carrier, there is no affect on the main or published "do not call" databases.

Entries for newly registered numbers are added to the main database continually.

Once a week or so, the system goes through the main database and extracts all the numbers which are currently registered.  The result is the published database - the list of "do not call" numbers.  The published list has no information whatsoever on whose numbers these are, or on how long they have been registered.

The published database could contain several million numbers.  As a text file, with five million ten digit numbers, it is fifty megabytes or so.  Due to the highly repetitive nature of most of the numbers, this could be compressed enormously, probably to five or so megabytes, using standard .zip compression programs.  Specialised compression techniques could reduce the entire published database to one or two megabytes.  The published database would probably be made available in sections, such as 02 xxxx xxxx, 03 xxxx xxxx etc.
 

The published database reveals no private information

Arguably the published database could be generated each day, or each hour, from the main database, but the idea of doing it once a week is to make it more difficult for external observers (who can analyse successive releases to see which numbers have been added or deleted in successive versions of the published database) to pin-point the time at which a number was registered.  If the published database was updated every day, then someone trying to establish the ex-directory number of a person who has just moved into a given area could watch each days published database to see which numbers in the relevant range were added on that day.

I believe that these provisions make the system completely bulletproof against the possibility of revealing any private information - but this needs to be tested by other people thinking about its ramifications as well.  Please let me know your thoughts.  The published list would contain many numbers which are ex-directory - but that is little advantage to a sophisticated attacker who wanted to compile a list of ex-directory numbers.  Such a list could be compiled by taking the entire number range, subtracting those on the publicly available CD-ROMs of white pages numbers (Telstra does not sell these, but some ADMA members compile them by having Telstra's directories typed in manually in cheap labour countries.) and by calling the remaining numbers briefly with a computer to see if they ring, or are not in service.
 

Conclusion

The technicalities of maintaining the main database, generating the published "do not call" database and making it available via the Internet and via a Web based query service are straightforward.  The programming costs of this system, its administrative software and web interfaces would not be high.  The system would run on any decent PC under Unix or perhaps NT.

Telemarketers and those who provide their list software will have no difficulty in using the published database or the web-based query functions to avoid calling the "do not call" numbers.  Small-time telemarketers can use the tone-dial query service - which would involve some additional, straightforward, programming, and one or more computers with appropriate interface boards around the country to handle such calls.

The scheme would reliably and efficiently let telemarketers know which numbers not to call.

It would need to be maintained carefully, and since it is likely to have quite a few million people registering numbers every three or so years, there is quite a lot of administrative work to do.  Automated methods of registration would obviously be preferred.  These would include a web-form - if there was a reliable way of identifying the bonafides of the person registering the number.  Another approach would be to have the people register by phone - with the operator receiving CLI  (as telecommunications carriers and service providers do): the caller's number plus a bit to say whether it should be sent to a CND service.  Applications from businesses might be more complex, since they might want to register a range of numbers at once.

Over time, the service would prove to be quite popular, and telemarketers would find themselves restricted to calling a smaller and smaller group of people.  This is exactly as it should be.  Telemarketers will save money and will not be so widely and intensely despised as they are now.  Telemarketers will have no legitimate cause for complaint, since people need to re-register every three years in order to not get their calls.  Telemarketers might desire for a shorter period than three years - but that would increase administrative costs - which telemarketers should by rights be paying for.

The above scheme is entirely reasonable.  Indeed it is a great concession by the public to the telemarketers that millions of people should have to take specific action every three years to retain the same level of privacy which they accord others.  The vast majority of people do not makes calls which they know will not be welcomed by the recipient.  Telemarketers make millions of such calls.  The above scheme is a big concession to telemarketers - and I do not believe they deserve it.  Best practice in outbound telemarketing is to call those who have previously opted-in.
 
 

Appendix 3  Where does outbound telemarketing sit in the scheme of things?

(This material is based on that in the main page at http://www.firstpr.com.au/issues/tm/ ).

Diagram 1 below depicts how outbound telemarketing is hated by most consumers and is typically manipulative and uninformative. There are many other less intrusive, more informative and better accepted methods of promoting, selling and funds raising.

There is no advantage at all for consumers in being contacted by outbound telemarketing compared to the many alternatives.

Only a few organisations persist with outbound telemarketing and the upset they cause is out of all proportion to the revenues they raise. Those practices in the lower left corner are the ones most in need of regulation. Diagrams 2 and 3 show the various forms of advertising, retail shop sales and toll-free phone information/ordering (inbound telemarketing) as being both generally accepted and informative.

These diagrams are from 1994 when I was the consumer representative on the Austel Mobile Churn committee - in which largely recalcitrant carrier representatives laboured over a code which didn't really do anything to stop intrusive marketing of mobile phone users.  In 1996 or 1997, the ACCC decided it wasn't good enough.

Diagram 1:  Outbound telemarketing is uninformative, manipulative and very poorly accepted

 

(For the ACCC printed version, the text and tables of strategy.doc/rtf have been printed out.)

December 1998 - Thanks to the StarOffice 5.0 http://www.stardivision.com I have been able to convert strategy.doc - with all its tables - to HTML: strategy.html (Previously this was available only as: strategy.doc or strategy.rtf  .)

This file which compares many aspects of the following methods of promotion and selling. This was prepared for the AUSTEL Mobile Churn Committee in 1994, but is relevant to outbound telemarketing, direct mail, and door-to-door sales and their many less intrusive and more informative alternatives:
 

• Personally targeted means:
• Door-to-door sales
• Outbound telemarketing - voice
• Junk faxes (outbound telemarketing by fax)
• Electronic mail
• Direct mail
• Advertising:
• Letterbox drops
• Ads in magazines and newspapers
• TV adverts
• Radio adverts
• Billboard and public transport ads.
The above approaches are examined in a tabular manner according to the following questions:
 
• Cost (to the organisation, not the consumer)
• Persuasive or manipulative?
• Time/space and other restrictions
• How many people respond positively?
• How objectionable is it for those who don't like it. Therefore how much damage is caused to the organisation's public standing?
• Can consumers defend themselves?
• How informative can it be?
• Can the customer keep material for future reference?
• Can it include a form to enable the product or service to be specified and ordered?
• Are there any other benefits to the consumer?
• Is this the least intrusive way of being exposed to similar or greater information?
• Is it incongruous for a phone company to approach a customer in this way?
• Information privacy issues when targeting mobile phone users.

The above approaches, plus retail shops and toll-free order/information lines (inbound telemarketing) are examined graphically in two dimensions:
 
 
• Very informative and useful < ------> Manipulative
• Well accepted by consumers < ------> Hated by consumers

The first diagram  is above. The other two (in black and white ) are below.

Legislation specifically aimed at stopping outbound telemarketing has been introduced in some overseas countries, including the US, with varying degrees of success. I have not fully researched overseas developments, but see http://www.junkbusters.com/ .

Because outbound telemarketers are in the lowest few percentiles in terms of responsibility and sensitivity to the reasonable expectations of citizens and governments, I am not convinced that a code of conduct will be sufficient to stop the worst offenders. As many have advocated since 1992, a legislative approach is probably the only sufficiently effective solution. Strong laws need to be combined with good methods of identifying and prosecuting callers who consistently break the rules - they need not be draconian or unduly restrictive of generally acceptable communications.

High levels of telemarketing - such as in the US where several calls per day may be received at home - have the potential to seriously erode our sense of privacy and to detract from the generally trusting Australian national character.

There are many reasons why it is worth the effort to stop unwanted telecommunications of all kinds. Not least is the purely economic matter of Australia's reputation as a good tourism destination, populated by friendly people. If we are all peppered constantly with calls from !*%@#!& ^#! telemarketers, and if our lives can be and are interrupted at any time at the whim of some empty-headed cold caller, then we will not be a very friendly bunch of people at all.

There are no effective personal defenses - neither answering machines, nor Calling Number Display offer any respite from telemarketers. They leave messages, including ones which lead you to call them without realising they are telemarketers - and CND would be useless since telemarketers would either not allow the display of their number, or there would be no way that anyone could know all the numbers of all the potential telemarketers. Even if you could know it was a telemarketer, and not answer the phone, the telemarketer keep ringing until the get what they want - the your attention - no matter what steps you take to avoid them.

Any centralised, nationally based efforts to curb outbound telemarketing are to be encouraged, because there is no effective alternative at a personal level. Whether these are based on codes of conduct, or on legislation, they must have teeth to deter the many rogue telemarketers, and there must be a centralised, national opt-out list of numbers which should not be called. (See Appendix 2 above.)

Here are the last two diagrams referred to in strategy.doc

Diagram 2: Consumer acceptance of various advertising approaches

Chart 3: Retail Shops and Inbound Telemarketing

Appendix 4 Why outbound telemarketing should be minimised or eliminated

1 - Outbound telemarketing has no benefits for the consumer over other less intrusive
means of promotion.

Unsolicited faxes, or visits from sales people are at least as intrusive.  Newspaper, magazine, TV and radio ads can all carry a toll free number.  These are more informative, non-intrusive and gives the consumer the opportunity to contact the company when they choose.

Direct mail (mass mailings of personally addressed promotional material) and letter-box drops (to everyone in the street who does not have a no-junk-mail sign) are more informative and less intrusive than an unsolicited phone call.  These are a far more widely used way of contacting potential customers than outbound telemarketing and much more accepted by consumers.

(The advantage of outbound telemarketing to the seller is that they can fish for customers who are just about to buy something, or that they can trick or cajole them into buying or donating.  These are to the customer's detriment. Outbound telemarketing is expensive - it can typically only survive when selling things at a high profit margin, or accepting donations for a high commission.)

2 -  Most people hate getting outbound telemarketing calls.
 

ADMA's own 1992 survey  shows that 70% of people who respond to a market research phone survey find it unacceptable.  An even greater proportion of elderly and housebound people find it unacceptable.  Assuming a 70% response rate to the survey, and that the 30% who rejected it would also find telemarketing unacceptable, this means that 79% of people reject telemarketing.  There are many reasons:

It is an interruption which offers no benefit to them.

They cannot defend themselves from receiving or answering the call.

The call is an unwanted use of the person's telecommunications equipment.

Personal space is violated by any phone call, but people have phones on the basis that the calls are going to be of value to them.  Telemarketing calls have zero or negative value.  Some apologists try to distinguish between intrusion and privacy - but intrusion is a subset of the issues that people describe with the word "privacy".  The use of someone's personal details for an unauthorised purpose, or an interruption to their home or work life is an invasion into the space which people manage - the personal space which is very close to them and feels like part of them.  Outbound telemarketing systematically invades the personal space and the minds of millions of people.  This personal space, and the feeling that you control what you are thinking about as you wish, is essential to happiness and sanity.

The calls happen without warning at almost any time.

Their pleasant greeting to the person who called is wasted on someone who is being paid to manipulate them.  The telemarketer often seizes the greeting as the key into their spiel.

This causes people to be less willing to be pleasant when answering the phone, and to turn nasty when a suspected telemarketer calls.  Sometimes this is inappropriate - I have become hostile to a hapless person from my bank who called me, and whose manner was similar to a telemarketer's.

It is extremely frustrating to be annoyed by someone who is (typically) totally insensitive to almost anything you say.  Within seconds they will be annoying someone else.  Telemarketers become inured to the protests, pleas and abuse they receive.  One telemarketer I spoke to felt sorry for herself - she said she was was just doing her job, and was polite.  I said her manner of speech was polite but her action in calling was the opposite of politeness.

Because telemarketers tend to call again, one reasonable approach to them is to be really unpleasant so they are less likely to try later.  This has the advantage of upsetting the staff, increasing staff turnover and costs and reducing the likelihood that the company will continue telemarketing.  The disadvantage is that ordinary pleasant people have to adopt an unpleasant approach at a moment's notice to defend their peace and quiet.  This ends up being an upset to their mental peace and quiet anyway.

Normally when someone calls, they are being themselves.  A telemarketer is not being themselves and it is often impossible to converse with them normally.  They are actors, reading a script, and could have a supervisor listening in or standing behind them.  So the consumer's interest in telling the telemarketer to get lost also may cause upset  to the telemarketer and threaten their employment.  It is often difficult to get a straight answer from a telemarketer, since their aim is to follow their script and get money from you.  I once received a telemarketing call from a friend who was working for a finance company. The tone of her call indicated no friendship or familiarity, so I played along with it as if I did not know her, assuming she had a supervisor monitoring the call and that it was a fluke that one of the people she had to call was a friend.

Telemarketers may leave long-winded messages on answering machines - which have to be listened to so you can get to the next message.

Telemarketers leave messages on answering machines, with just a name and a number asking the person to call them back - so the person is tricked into wasting time and money calling them.

This makes it imperative that consumers be encouraged never to divulge personal information to callers of any kind who they do not know.  An industry which telemarkets its potential customers invites criminals and pranksters to call them as well - creating disruption or defrauding the customers and/or the company.

No such problem exist for inbound telemarketing, where the customer calls a well publicised number when they want to find out more about, or buy, a product.

Any industry which has legitimate products or services and an interest in its long term reputation should avoid telemarketing:

To avoid giving openings to callers who pretend to represent the company.

To avoid associating their product with the cheap products, inflated prices and/or manipulative sales techniques which are commonly associated with outbound telemarketing.

5 -  The pressure of telemarketing (and other unwanted phone calls) leads people to defend themselves with unlisted numbers - "silent lines".

Around 1992, 12% of Australian subscribers had unlisted numbers, (the 1998 figure is generally thought to be 15%, or a million customers paying Telstra $32 a year to keep their number and address out of the white pages) the figures for the USA and California were 40% and 55%.  In early 1995, Michael Pickering (Privacy - Telstra) said that 16% of residential subscribers had "silent lines".

This leads to greater difficulties for people who want to find someone's number for legitimate reasons (including emergencies), and to extra costs for phone companies in running the 013 service.  (This is the justification Telstra gives for charging extra for "silent lines" - but Minister Michael Lee initiated an investigation into this charging and I understand no proper justification was ever found.)  Changing to a new number for a "silent line" causes disruption for many people, and the people who inherit the old number may receive calls intended for the person who first had the number.  In addition, the new unlisted number may inherit phone calls (including telemarketing calls) directed at its original owner.

This is (was) exacerbated by Telecom (Telstra) selling telemarketers lists of numbers which are deliberately out of date.  Although numbers are left unused for a year (?) before being used as "silent line" numbers, the out-of-date telemarketing lists mean that calls are still made by telemarketers to these numbers. (1998: I am not sure whether Telstra still sells lists of residential customers.  It certainly does actively market its own CD-ROM Yellow Pages product which is specifically designed to facilitate outbound telemarketing to businesses.)

6 -  Telemarketing (and other unwanted calls) contributes a great deal to the demand for Calling Number Display - which has huge problems with privacy and efficiency.

In fact, CND is virtually useless as a defence, but that is not the way people feel when they first hear of CND.  So they may not understand consumer advocates who warn against the complications of CND.  They may think "I should have the right to see the number of the person who calls me before I decide whether to answer their call."  CND's problems are documented in The Diagrammatic Overview of Telecommunications Privacy and Quality and notes and in a separate set of notes on CND and at http//www.ozemail.com.au/~firstpr/cnd/ .

7 -  Telemarketing inevitably leads to some incidence of SUGging - Selling Under the Guise of Market Research.

This makes consumers inordinately suspicious of anything which seems to be a survey. This reduces the response rate of market research phone surveys.  One problem is that this increases the cost of market research phone surveys.  (Disillusionment may also make it difficult for other types of survey as well.)  A more serious problem is that the sample of people who do respond becomes less representative.  Quite a lot of market research and social research is valuable to consumers, if only as an aid to formulating well informed public policy.  Telemarketers and SUGging telemarketers in particular create a serious problem for the market research industry.

8 -  Telemarketing leads to greater distrust of sales people in general - increasing the costs for businesses in promoting products and hence increasing the cost of many products to consumers.

9 -  "Charity" telemarketing inevitably leads to disillusionment with particular charities or charities in general.

This may be partly because of the realisation later that the huge costs of the campaign inevitably use up most of the money donated - or that most of the money goes to commercial operators.  A second factor is that someone who donates is inevitably called again - by the same charity/company or by another - due to the swapping of lists.  The telemarketers have nothing to lose and they continue until the donor is burnt out.  Almost everyone I have met who gave money at one stage to "charity" telemarketers eventually regretted it and decided never to donate again to them.

I recently (1995) talked to a telemarketing company which licensed the name of a teenage cancer charity (CanTeen) and sold a pen and letter opener set for a $39.95 "donation" - with an invoice from the charity.  There was no mention in the call or the paperwork that any other organisation than the charity was involved, and yet the telemarketing supervisor confirmed (without apparent shame) that only $2 of that $39.95 goes to the charity.

10 -  People get upset with Telecom (Telstra), the Government, Austel (ACA and ACCC) and the TIO for failing to protect them from a blatant abuse of their phone, and intrusion into their personal space.

People will answer the phone, and interrupt their thinking and their activities to do so - based on the assumption that the call is from the 99.9% of the population who would only call a person if they expected the call to be welcomed.  Consequently people open their minds to whoever calls them.  Outbound telemarketing is a deliberate, direct invasion of people's minds.  Extreme anger and frustration results from this occurring without warning, at any time of the day or evening, time and again, year after year, while the authorities do nothing to prevent it.  (1998: As argued in my submission to the Senate Information Technology Committee http://www.firstpr.com.au/issues/#sc-it the primary reason governments exist is to protect the public systematically and efficiently from things that they cannot protect themselves from as individuals.)

11 -  Overall standard of decency are threatened by exposing the population to continuous attacks on their privacy and peace.   America is the obvious example.

CTN member and professional market researcher Maureen LeBlanc reports that US citizens are in general much less concerned about other people than Australians are.  High levels of telemarketing there are probably both a cause and an effect of these lower standards of care - along with other factors such as prevalence of handguns. In Australia we now have ways of closing the door on telemarketing and stopping it from eroding our standards of what is normal, decent behaviour.

It is particularly important to stop high profile companies like Optus and Telecom from doing it - their telemarketing makes it seem more acceptable to the many smaller businesses who are toying with the idea.  In the past, telemarketing was mainly conducted by fly-by-night businesses with dodgy products.

(1998 - Telstra and Optus continue outbound telemarketing, but not with the intensity of the analogue mobile campaigns of the mid 1990s.)
 

13 -  The employment it generates is soul-destroying - typically with poor pay, poor conditions and no prospects for promotion.

The skills of manipulation and the insensitivity required of a successful outbound telemarketer are virtually useless for any productive career.

(1998: ADMA worked against a NSW union attempt to achieve $40k pa. wages for telemarketers.)

Update history

• 1998 December 9  Added link to the new HTML version of strategy.doc.
• 1998 October 20  comments-rw-1.html finalised, printed and posted to ACCC.