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 3081These comments are intended to achieve several purposes:
Ph 03 9459 2889 Fax 03 9458 1736 WWW: http://www.firstpr.com.au Email email@example.com
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.
- Robin Whittle
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.
(Four appendices follow.)
|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.
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:
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.
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.)
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.
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:
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.
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.
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.
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
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:
The above approaches, plus retail shops and toll-free order/information lines (inbound telemarketing) are examined graphically in two dimensions:
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
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:3 - There is no way of knowing for sure who the telemarketer really is.
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.4 - The use of answering machines as a defence against telemarketing (and other unwanted calls) ties up the phone lines and delays communication between people.
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.12 - It is an expensive way of selling products, so increasing prices, and/or diminishing the quality of goods or services to consumers.
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.Outbound telemarketing is the product of a small number of people making a lot of phone calls. Each telemarketer upsets and wastes the time of thousands of people a week. It detracts from national productivity. It severely damages the reputation of those companies which conduct it. Very few respectable businesses can handle this damage, and the phone companies are loosing badly in this regard. In the long-run, telemarketing is only genuinely profitable for a small group of businesses who have no interest in consumers and do not need to be respected by the public.
(1998: ADMA worked against a NSW union attempt to achieve $40k pa. wages for telemarketers.)