Second set of comments to the ACCC on ADMA's proposed Code

From Robin Whittle   11 Miller St Heidelberg Heights  Vic 3081  20 November 1998.

This is http://www.firstpr.com.au/issues/tm/comments-rw-2.html

Back to the main telemarketing page.
 

1 - Letter to Mr JP O'Neill

2 - Reasons for an opt-in approach for outbound telemarketing

3 - List of telemarketing calls I received so far in 1998


1 - Letter to Mr JP O'Neill


To Mr JP O'Neill
Senior Assistant Commissioner
Adjudication Branch
Australian Competition and Consumer Commission

Dear Mr O'Neill,

Thankyou for your letter of 12 November, outlining changes ADMA's lawyers have
made to their draft Code and inviting my submissions prior to the pre-decision
conference on 26 November.

While I am not representing any particular consumer organisation, I have been an
active in privacy advocacy - since AUSTEL's 1992 Privacy Inquiry.  I have
represented Consumers Telecommunications Network in a number of AUSTEL
and Standards Australia's committees.  My second set of comments focus on the
problem of outbound telemarketing - because this is a debate I have been active in
since 1992 and because other advocates are generally concentrating on the many
other failings of ADMA's draft code.

Before commenting on the Code itself, I would like to join other advocates in
registering my concern about the way the ACCC has progressed ADMA's
application.  Other than the 9 November press release regarding the code launch,
the ACCC web site has had no information about the ADMA code application.
The press release incorrectly states that consumer organisations have been involved
in the development of this Code.  The launch of the code at an ACCC conference,
with the involvement of Prof. Allan Fels is something few people can understand,
considering that Commission is in the process of determining the merits of the Code
and that consumer advocates have identified serious problems in the Code and in
the ACCC's Draft Determination.

Your organisation is widely respected for tackling Australia's biggest companies on
matters of great importance and complexity - especially in telecommunications.  Yet
in this relatively straightforward matter of protecting consumers from intrusive
marketing practices, your organisation's Draft Determination takes no account of
protecting consumers and businesses from outbound telemarketing calls. The
amendment concerning ADMA's "Don't Call" scheme is unworkable.  No privacy-
conscious consumer should provide their full name, address and telephone numbers
to ADMA when all those details will be distributed to ADMA members, and so be
available electronically for those members and their staff to copy and use in ways
which cannot be controlled.  Furthermore, this scheme does not seem to be
applicable to businesses.

The facts are straightforward:  ADMA members are involved, on a massive scale, in
the systematic intrusion into businesses and homes - in a way which is rejected (at
least in telemarketing and email, if not in direct mail) by the vast majority of those
targeted.  The disruption and annoyance to each person - and the cost to businesses
- of a single telemarketing call cannot be justified, since it provides no benefits
whatsoever compared to non-intrusive forms of advertising backed up by a free-call
number.  That this disruption and cost burden is repeated time and time again, for all
businesses and the great majority of homes - collectively many tens of millions of
times each year - is a result of a few unprincipled businesses and charities and the
complete lack of regulation to date.  A measure of some of the burden on residential
telephone customers is that nearly a million of them pay Telstra $32 pa. to suppress
their name and number from the White Pages directory.  The most common reason
for doing this is to reduce the incidence of telemarketing calls.

Consumers and businesses depend on the ACCC to regulate these costly and
disruptive business practices - because there is no way they can protect themselves
individually.

ADMA's code is an amateurish document, made without consumer involvement,
seeking the ACCC's legitimisation of these intrusive marketing practices - without
an effective mechanism by which businesses and consumers can protect themselves.

An effective opt-out scheme for telemarketing is possible - but it must be
independent of ADMA and have no privacy problems for those who register their
numbers.  It must protect both residential and business telephone customers and it
must be paid for by telemarketers.  In my initial submission I proposed an
independent scheme which published a list of opted-out telephone numbers.  A
better scheme with fewer privacy problems has commenced in the USA - filtering
the telemarketers' lists for a fee.  ( http://secure.mailorder.com/tps/ )

ADMA's own research shows that at least 70% of people at home find outbound
telemarketing calls unacceptable.  Most businesses have a sign on their door
such as "Absolutely No Hawkers!", and it is well known that businesses suffer
disruption and wasted staff time fending off outbound telemarketers.

It is the ACCC's responsibility to approve a code which genuinely protects both
residential and business people from all outbound telemarketing calls.  It follows
that any effective scheme based on the opt-out model will grow rapidly to include
the majority of telephone numbers.

Since the costs of maintaining this opt-out scheme must be borne by outbound
telemarketers, and since it is unfair to expect people to have to register with any
scheme in order to protect their privacy, an opt-in scheme is clearly preferable.
This will save money for telemarketers, protect privacy very well and be no trouble
for the public or businesses.  ADMA members are adept at compiling lists - and so
the best-practice code requirement for telemarketing is that no calls will be made to
any business, individual or household unless they have given their prior, explicit and
informed consent to such calls.  Such consent should be in writing and not be
gained via outbound telemarketing or other intrusive means.  Consent is not
necessarily hard to obtain for that proportion of the population who find such calls
acceptable.  For instance they could be offered inducements, such as prizes or
FlyBuy points.

There is no valid moral, legal or economic reason whatsoever why costly intrusive
practices of any kind should be directed at those who have not consented to them.
Arguments regarding freedom-of-speech for marketers - as have been raised in the
USA - are specious.  If ADMA genuinely respected the privacy and other interests
of consumers and businesses, then it would insist on an opt-in arrangement for
intrusive marketing approaches such as telemarketing.  However it seems that
ADMA's concern for consumers and businesses (including those targeted
with nothing more specific than the fact that they are listed in a phone directory) is
analogous to shooters' concerns for ducks: that they should be plentiful and
unprotected.

The vast majority of outbound telemarketing is an unauthorised and unacceptable
use of the recipient's telecommunication service. It is intrusive and upsetting for
everyone - and expensive for businesses.  Even if there were no privacy issues
relating to telemarketing, the ACCC would have a clear responsibility to regulate
practices which placed unfair cost burdens on businesses who do not choose to
participate.

The incidence of outbound telemarketing is growing with cheaper tele-
communications services and new technology (including automated recorded-voice
calls without human operators, which ADMA's current code allows).  If outbound
telemarketing reaches the plague proportions it has in North America, then it will
seriously damage one of Australia's most fragile, most cherished and most
economically important assets - our general sense of trust for people, including
people we don't know.  For many reasons, it is vital that the ACCC works
assiduously to protect Australians from outbound telemarketing.  I believe it is the
ACCC's responsibility to reject this draft code, or to accept it only with an opt-in
arrangement or an independent opt-out scheme so that individuals, households and
businesses can be protected from outbound telemarketing.

Telemarketing is just one aspect of the problems with the current code.  My first
submission and those of other advocates and consumer bodies identify many other
shortcomings.  These include the vague and ineffectual provisions for regulating
marketing uses of email and other forms of Internet communications, and the
extremely narrow definition of "Direct Marketing" - which restricts the applicability
of the code to subset of what is generally accepted as direct marketing.

I hope that the feedback from consumer representatives will convince the ACCC
that ADMA's code is fundamentally flawed and is nowhere near achieving the
protection which the ACCC requires.   The current code is not amenable to a few
modifications to make it, as Allan Fels says in the press release: "a direct marketing
regime of world's best practice."

The best course of action would be to reject ADMA's application and suggest that
they should enter into genuine negotiations with all interested consumer organisations.
ADMA should again approach the ACCC when a fresh code has been developed
which has the support of a broad cross-section of consumer bodies.
 
 
 

                  Yours sincerely
 
 
 

                  Robin Whittle


 

2 - Reasons for an opt-in approach for outbound telemarketing

The ACCC should not approve any code unless it provides the most effective means of protecting residential and business telephone customers from outbound telemarketing calls.  This section concentrates on telemarketing, but in many respects is relevant to other forms of unsolicited sales, marketing and fundraising communication conducted over telecommunications systems.  Email is the most obvious example - but new systems such as Internet voice communications could easily be misused by direct marketers unless their activities are properly regulated.

2.1 The best opt-out approach - filtering of calling lists

In my first submission to the ACCC regarding ADMA's Code ( comments-rw-1.html ) I proposed an opt-out scheme for telemarketing which is independent of telemarketers and ADMA, and which makes available to direct marketers (for a fee) lists of opted out telephone numbers - without any information relating those numbers to names or addresses.  This would protect residential and business telephone customers from outbound calls.

This would correct two fundamental problems with ADMA's current "Don't Call" scheme.  Firstly that it distrubutes not just the phone number, but the name and address information to ADMA members, where there is now way of preventing it being copied by those companies or their staff and used in ways which are contrary to the interests of those people seeking protection from telemarketing.  For instance, a single staff member copying this file could pass the information on to criminals, private investigators, or anyone else who was interested in finding the phone numbers and addresses of people who pay Telstra $32 pa not to be listed in the White Pages (the "silent line" service).  Secondly, the ADMA scheme does not at present appear to protect businesses.

However my original proposal still has problems.  Distributing a list of numbers which are supposedly not to be called does raise privacy problems.  For instance, in some rural areas, a very small number range (such as a thousand or so) is reserved for a particular geographic area.  This information is published in Telstra's and Optus' price lists.  Since a significant proportion (or the majority) of silent line and business customers would register their numbers with the opt-out scheme, the published list of numbers provides interested parties with a short list of numbers for silent line customers in a small geographic area.

A better approach is for a single, independent body to maintain a list of opted-out telephone numbers (fixed and mobile) of business and residential customers - but not make it available to anyone.  Direct marketers forward a list of numbers, or list of names, addresses and numbers, to the independent body, and for a fee, the body filters the list - returning it with a character or database field to flag those numbers which should not be called because they are on the opted-out list.

Such a filtering service is now being provided in the USA by a company called the American Computer Group: the Telephone Preference Scheme, "SAFEtps".

http://secure.mailorder.com/tps/
The same company operates similar filtering services for direct mail (postal mail) and email addresses.  The filtering service is achieved by the direct marketer sending their calling list via encrypted Internet file transfer.  The filtered file - actually the same file with opted-out numbers flagged - is available within ten minutes.  The process is entirely automated, with automated credit card payment.  The costs in US dollars are:
"Cost for this service is $49.95 for 0 to 50,000 records/names
processed then an additional $0.40 per thousand names 
processed for files above 50,000 records/ names."
Translated into Australian dollars, a 50,000 record calling list would cost $78 to filter - the cost of about 400 telephone calls.  So assuming that at least 1 % of the population registers their numbers with the filtering service, and that calls to those numbers would not have resulted in a sale anyway, then the cost of the filtering service is justifiable purely in terms of the saving in telephone calls.

Local calls are free in the USA, so the fact that this service is viable there, and that it and its mail and email equivalents are respected by direct marketers (the phone and mail services are based on the US Direct Marketing Association's "Don't Call" and "Don't Mail" lists) indicates that such a service would be even more viable in Australia, with its higher telephone costs and especially with an ADMA code mandating its use.

However it is vital that any such scheme in Australia be operated by a company or organisation which is not a part of the direct marketing industry.
 

2.2 The best opt-in approach

Outbound telemarketing ties up telecommunications services, causes upset and distrust, wastes time, costs businesses money and has a number of other serious negative impacts on society and on those who are targeted by such calls.  By rights, this sort of call should never have been allowed on the telephone network - since people pay for a telephone service for reasons other than receiving such calls.   Most networks, including the road network, the Internet and most clubs and associations require participants to respect the wishes of other participants - but this has not yet been properly implemented in telecommunications regulation.

ADMA's own research shows that at least 70% of the population find telemarketing calls unacceptable - so the only reasonable approach is to gain people's permission before making such calls.  Clearly, this consent needs to be gained by some non-intrusive means - such as advertisements and a free-call number, a web advert and a web-site with a form or some other means.   There is no reason why such a list could not be established - since a significant number of consumers will respond to inducements, such as the chance to win prizes, or points in a loyalty or rewards scheme such as FlyBuys.

In all cases, precautions must be taken to avoid pranksters fraudulently adding other people and businesses to this list.  Persons and businesses need to be able to take themselves off the list as well, and find out from a telemarketer which list the caller was using.

One approach is for each direct marketing company to generate such a list themselves.  This would need to be kept to themselves if the people only indicated they were prepared to accept calls from that company.

Another approach is for list brokers to develop - perhaps with other companies - lists based on a person or business' desire to receive telemarketing calls in general, or specific to particular kinds of product, service or funds raising.

A better approach would be for ADMA to work with its members to develop an Australia-wide opt-in list for telemarketing - either for all telemarketing calls or preferably with those opting-in identifying which kinds of calls they are interested in receiving.

The intrusive and costly nature of outbound telemarketing makes such an opt-in approach the only means of properly respecting most consumers and businesses perfectly reasonable desire to be left alone, and not to be burdened with either telemarketing calls or the need to register with an opt-out scheme.  The same principle applies for other intrusive forms of marketing - the community and targeted businesses and individuals should not be burdened with having to set up and register with a separate opt-out scheme for every form of intrusive marketing which rapidly evolving technology makes possible.

There can be no valid argument against this, since telemarketing provides no benefits whatsoever compared to alternative non-intrusive forms of advertising backed up by a free-call number.  (See the diagrams and strategy.doc in Appendix 3  of my first set of comments:  comments-rw-1.html .)
 

2.3 Opt-in is less costly for telemarketers and better for consumers and businesses

An ACCC approved code must have an effective control scheme for protecting residential and business telephone customers from telemarketing calls.  It must be effective for mobile phone numbers and ordinary phone numbers.  It must focus on the telephone numbers themselves, and not reveal any information relating those numbers to whoever they belong to.

If it is an opt-out scheme, and it is effective, then within a year or two the majority of residential and business telephone customers can be expected to register.

Since the costs of the scheme must be borne by telemarketers, an opt-out scheme would soon grow to have significant administrative costs of handling all the registrations and inquiries from residential and business telephone customers.

An opt-in list would be smaller and less expensive to maintain than an effective opt-out list.

So the benefits of an opt-in solution over even the best opt-out scheme are clear:

The long-term benefits to society and telemarketers are obvious.  A systematic way of looking at this is that most outbound telemarketers' relationship with society is currently analogous to a leech or some other parasite.  As society develops long overdue regulatory mechanisms to protect itself from this parasitic activity, it has the ability to seriously restrict outbound telemarketing - for instance with the costs of maintaining a massive opt-out scheme.   If outbound telemarketers are to continue in the long-term, they must reach an accommodation with their host society - and an opt-in list is by far the best approach for the majority of the population, whilst also being the most productive and cost-effective for telemarketers.

I believe that those ADMA members who wish to practice outbound telemarketing in the long term will be best served by an opt-in scheme.  If ADMA management resists such a proposal, it is simply because they have a short-term, unwise, view of the situation - and that the idea of an opt-in list runs contrary to the powerful hunting instincts which drive a lot of human behaviour, including marketing behaviour.


 

3 - List of the 18 telemarketing calls I received so far in 1998

Here is reasonably complete list of telemarketing calls I have received between January and 19 November 1998.  My listing in telephone directories is as follows:
 
Whittle Robin 11MillerHeidHts...9459 2889
Real World Interfaces
          11MillerHeidHts.................9459 2889
Neither of these are in bold-face.  These are White Pages entries.  I have specifically instructed the Yellow Pages that I do not want to be listed there. "Real World Interfaces" is my electronics business name.  "First Principles" - my consulting and writing business name - does not appear in telephone directories.  (There is an erroneous listing for "Whittle R" listing a phone number which is permanently in use for my Internet connection - so I never receive any telemarketing calls to that number.)

So my directory listing is exactly as per any normal residential listing, plus I have a business name listing.  It seems that 5 or so or the 18 telemarketing calls I noted were specific to the business entry, since most callers wanted to speak either to Mr (or Mrs) Whittle, and did not refer to a business.  Since I work from home, I recieve most calls directly - my answering machine is on only when I am out.

In addition to the calls listed below, I received two calls from electronic businesses - one whose mailing list I was somehow on, and another who I do business with occasionally.  These are effectively telemarketing calls, even though they are ostensibly ringing to check the details for their mailing list.  The callers were not aggressive or manipulative like ordinary mass-campaign telemarketers, and I felt that I was talking to a real person.

I think that the pattern of calls I receive reflects what anyone in my suburb would receive.  There is anecdotal evidence that those in more wealthy suburbs - such a Camberwell - receive a larger number of outbound telemarketing calls.   Certainly, if my business was listed in the Yellow Pages, I would receive many more calls - such as from funds-raisers and office supply companies.  I have heard that companies receive telemarketing calls in proportion to the size of their Yellow Pages listing or advertisement.

My notes were taken on sheets of paper - so they don't contain every detail.

The "Raffle" calls are a new phenomenon this year.  They say "This is not a sales call and we are not asking for money.  We are wondering if you would be interested in selling raffle tickets for us."   Does the ADMA code's definition of direct marketing cover this?

What about being offered free membership in a nightclub, free entry to a "real-estate seminar" or being asked if I had any clothes to donate to a charity?  They are all intrusive telemarketing calls and should be regulated as such - but do they fit into ADMA's definition?  Probably not - it is to narrow.

The charities or supposed charities listed below as the caller are highly unlikely to be the actual caller - fundsraising calls are typically made by companies licensing the charity's name.  For instance in the past a company licensing the name of the CanTeen charity told me that $2 of the $39.95 "donation" (for a writing set) actually went to the charity.

Those calls marked with an asterisk were probably in relation to my "Real World Interfaces"
White Pages listing.

I generally asked to be taken off these caller's lists, but very often they had no facility for doing this.
 

Date    Time      Caller                     Reason and notes
       
 ? Jan   ?         ?                          Raffle.

 ? Jan   ?         Macfarlan Burnett medical  Raffle.
                   research.

22 Jan   10.30 AM  ?                          Free taxpayer newsletter.

 3 Feb   ?         Diabetes society           Did I have any clothes for their
                                              opportunity shop?  This is a 
                                              new kind of TM call for me.
 
 7 Feb    7.20 PM  ?                          Did I want to come to a free real-
                                              estate seminar?
12 Feb * 11.20 AM  Champion Office Supplies   Trying to sell me office products.

 6 Mar    9.14 AM  Neighbourhood Dining (?)   "You will be delighted to know 
                                              you will be receiving $2400 . . . "

30 Apr *  2.40 PM  CanTeen (Teenagers with    Wanting to talk to the manager of
                   cancer)                    Real World Interfaces.

15 Apr   10.55 AM  Sportsmans Club in         Caller said she would take my number
                   Tocumwal                   off their list.

15 Apr    8.26 PM  Lifestyle painting and
                   roofing

21 Apr    8.34 PM  S.I.D.S - Sudden Infant    Caller said she would take my number
                   Death Syndrome             off their list.

10 Jul    6.25 PM  Deaf and Blind Assoc.      Two calls.

15 Jul    6.11 PM  Macfarlan Burnett medical  Again.
                   research.

24 Aug *  3.52 PM  Lions Club                 "Ringing businesses in Heidelberg".
                                              This indicates that my Real World
                                              Interfaces White Pages listing has
                                              been copied to a commercial list,
                                              or CD-ROM with search capabilities.

 9 Sep *  ?        "Telephony Australia"       

23 Oct    ?        CanTeen                    Again.

 4 Nov    11.30 AM Postel Australia           Fundsraising for the Flying Doctor
                                              service.  Caller said she would take
                                              me off their list.

17 Nov *   1.58 PM A nightclub in Brunswick   Offering free membership in a 
                                              nightclub.  Got my number "from a 
                                              computer marketing system".
Thankfully notable by their absence this year were the tireless and truly recalcitrant telemarketers Calder Windows (window shutters) and Better Grower Fertilizers.  These companies have called on average twice a year for several years and never seemed to take any notice of my requests (which they sometimes agreed to apologetically) to remove me from their lists.  These companies seemed to systematically call every home in Melbourne.

I estimate that this level of calls is a 50% growth over previous years.  Still, in the USA, some people get three telemarketing calls a day on average.  We must not allow the level of telemarketing to increase - our relatively trusting national character cannot tolerate repeated needling at any time with such manipulative and untrustworthy calls.  Each call is unacceptable and is the product of systematic campaigns which the callers know fully how much disruption they cause.

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