[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
THE KNOW YOUR CALLER ACT OF 1999 AND THE TELEMARKETING VICTIM
PROTECTION ACT OF 1999
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TELECOMMUNICATIONS,
TRADE, AND CONSUMER PROTECTION
of the
COMMITTEE ON COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
on
H.R. 3100 and H.R. 3180
__________
JUNE 13, 2000
__________
Serial No. 106-117
__________
Printed for the use of the Committee on Commerce
U.S. GOVERNMENT PRINTING OFFICE
65-901CC WASHINGTON : 2000
COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas RALPH M. HALL, Texas
FRED UPTON, Michigan RICK BOUCHER, Virginia
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey
Vice Chairman SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee
CHRISTOPHER COX, California PETER DEUTSCH, Florida
NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma ANNA G. ESHOO, California
RICHARD BURR, North Carolina RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California BART STUPAK, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
GREG GANSKE, Iowa TOM SAWYER, Ohio
CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma GENE GREEN, Texas
RICK LAZIO, New York KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio
JAMES E. ROGAN, California DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING,
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
James E. Derderian, Chief of Staff
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
Subcommittee on Telecommunications, Trade, and Consumer Protection
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL G. OXLEY, Ohio, EDWARD J. MARKEY, Massachusetts
Vice Chairman RICK BOUCHER, Virginia
CLIFF STEARNS, Florida BART GORDON, Tennessee
PAUL E. GILLMOR, Ohio BOBBY L. RUSH, Illinois
CHRISTOPHER COX, California ANNA G. ESHOO, California
NATHAN DEAL, Georgia ELIOT L. ENGEL, New York
STEVE LARGENT, Oklahoma ALBERT R. WYNN, Maryland
BARBARA CUBIN, Wyoming BILL LUTHER, Minnesota
JAMES E. ROGAN, California RON KLINK, Pennsylvania
JOHN SHIMKUS, Illinois TOM SAWYER, Ohio
HEATHER WILSON, New Mexico GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING, KAREN McCARTHY, Missouri
Mississippi JOHN D. DINGELL, Michigan,
VITO FOSSELLA, New York (Ex Officio)
ROY BLUNT, Missouri
ROBERT L. EHRLICH, Jr., Maryland
TOM BLILEY, Virginia,
(Ex Officio)
C O N T E N T S
----------
Page
Testimony of:
Brubacher, Steven R., Senior Vice President for Operations,
Infocision Management Corporation, representing American
Telemarketers Association.................................. 69
Frelinghuysen, Hon. Rodney, a Representative in Congress from
the State of New Jersey.................................... 13
Harrington, Eileen, Assistant Director of Marketing
Practices, Federal Trade Commission........................ 26
Hatch-Miller, Hon. Jeff, Arizona House of Representatives.... 63
Salmon, Hon. Matt, a Representative in Congress from the
State of Arizona........................................... 9
Tierney, Virginia, Member of Board of Directors, American
Association of Retired Persons............................. 67
Material submitted for the record by:
Barton, Richard A., Senior Vice President, Congressional
Relations, Direct Marketing Association, latter dated June
13, 2000, enclosing material for the record................ 93
THE KNOW YOUR CALLER ACT OF 1999 AND THE TELEMARKETING VICTIM
PROTECTION ACT OF 1999
----------
TUESDAY, JUNE 13, 2000
House of Representatives,
Committee on Commerce,
Subcommittee on Telecommunications,
Trade, and Consumer Protection,
Washington, DC.
The subcommittee met, pursuant to notice, at 11 a.m., in
room 2322, Rayburn House Office Building, Hon. W.J. ``Billy''
Tauzin (chairman) presiding.
Members present: Representatives Tauzin, Deal, Largent,
Cubin, Shimkus, Ehrlich, Rush, Wynn, Sawyer, Green, and Dingell
(ex officio).
Staff present: Kelly Zerzan, majority counsel; Cliff
Riccio, legislative analyst; and Andy Levin, minority counsel.
Mr. Tauzin. The subcommittee will please come to order.
Good morning. Welcome. The subcommittee meets today to
discuss two bills addressing telemarketing.
The practice of telemarketing is certainly not a new
practice. To the contrary, there have been telemarketers in
business for many years. Telemarketing, however, is an amazing
phenomenon when it is connected to the Internet. And now that
telephones and computers are merging so rapidly in the Internet
world, telemarketing is becoming an incredibly productive tool
for the sale of products and services in our country and
throughout the world. In fact, I understand that the
telemarketing market last year was well over $330 billion. It
is an amazingly strong, lucrative market.
However, telemarketing may not be a phenomena as they say
electronic commerce is, and complaints regarding telemarketing
are dramatically on the rise in recent years. According to FTC
estimates, it received over 2,000 complaints about
telemarketers in the year 1997, but in 1999 it received well
over 17,000 complaints, indicating a rapid increase in consumer
concern and complaint about the way in which telemarketing
practices occur.
We, of course, can only speculate as to the reason for this
rise in consumer complaint. Perhaps more and more people see
telemarketing as an intrusion on their personal in-home
privacy, particularly during meal time. Don't we all have a
sense of that? And perhaps pitches and telemarketing sales
pitches and consumer relation practices are becoming more
offensive. Who knows? We are going to find out a lot more about
that today.
I can only tell you that this last month I was receiving
five calls a day from British Columbia. I mean, caller ID was
identifying a number of British Columbia. No messages were
being left. And I tried calling that number back. It obviously
was a computer because I could never reach anyone to find out
why British Columbia was calling me.
And most citizens of this country don't have the services
of the Capitol Police at their disposal, but I fortunately did.
I called the Capitol Police. My concern was--I called my
telephone company as well. My concern was that perhaps my
telephone was being used as a conduit for some illicit activity
or perhaps some scam and that this computer was using my
telephone and my telephone number for some bad purpose. I
didn't know. How could I know?
The Capitol Police chased it down for me and thankfully
shut it down. I am no longer bothered by these calls from
British Columbia. But I get a lot of calls that say just
personal, unavailable. I don't know who is calling. I can't
call them back to tell them quit bothering me; and yet, at the
same time, every now and then I get a call from someone who is
telling me about a product or service I am really interested
in.
Now how do we wade through this, this maze of what I
consider to be commercial tension that is developing in this
new electronic age where telemarketing is becoming an
increasingly important function? In fact, in our privacy
session we had at Lansdowne, one of the guest panelists at the
privacy sessions told us that when you think about e-commerce,
it is telemarketing. It is all about using the new Internet
services and eventually the broad band interactive services
with incredibly new and powerful techniques by which to sell
products by which to broaden the market from the marketplace of
easy access and walking or driving distance to a global
marketplace. So it really is about telemarketing. It is
essential that we examine and think about it today.
What we do know is that the committee indeed has a
compelling interest in determining how to bring down the number
of complaints and, at the same time, how to keep a vibrant and
very productive telemarketing marketplace alive.
We begin today by conducting hearings on two bills which
address very specific telemarketing practices that are, I
think, worthy of our review. The H.R. 3100, the Know Your
Caller Act, which is introduced by Congressman Rodney
Frelinghuysen of New Jersey, he is seeking, among other things,
to prohibit telemarketers from disabling or interfering with
the ability of your caller ID to display a caller's identity
and phone number.
By the way, Rodney, apparently some telephone companies are
allowing folks to sign up for a service that will not put a
call through unless it is identifiable on an ID--on a caller
ID. That may work good for some people, but for the last 2
months I haven't been able to call my mother from my telephone
in my car because it won't put the call through. And mom for a
month now has been trying to disable that system so that I
could call her, and thankfully this weekend she announced to me
that I could finally start calling her from my car phone again.
H.R. 3180, the Telemarketing Victim Protection Act, which
is being introduced by Matt Salmon of Arizona, will direct the
FTC to impose four new requirements and prohibitions on
telemarketing. Most important would be that telemarketers could
not make any calls between the hours of 5 and 7 p.m., the hours
when, obviously, they can generally reach us the best but
generally when we want to have family time.
So what is the role of government in this critical 2-hour
period when most of us are trying to enjoy our families? We
look forward to debate on these proposals and hope to learn
more from the witnesses today.
I want to thank you all for being here. I particularly want
to welcome my two colleagues, first of all, to the witness
panel, the Honorable Matt Salmon and Rodney Frelinghuysen. But,
first, I will yield to my friend in Ohio for an opening
statement and any other members in order.
Mr. Sawyer is recognized.
Mr. Sawyer. Thank you, Mr. Chairman. Thank you very much
for calling this hearing.
As you point out, the direct marketing industry is an
enormous and rapidly growing business in this country.
Concerning telemarketing, my figures show some $460 billion in
the United States. Who knows? By tomorrow, it may be $560
billion.
While telemarketing has in some quarters been a
controversial marketing practice, it can provide some benefits
for consumers. In many instances, consumers are introduced to
new opportunities or products through telemarketing.
Telemarketing can also promote the availability of competitive
alternatives to incumbent providers and thus facilitate a
competitive marketplace.
Unfortunately certain telemarketing practices can also be a
significant and intrusive nuisance for consumers as well as
promote consumer confusion. In some instances, rote
telemarketers can take advantage of this confusion to commit
fraud against consumers.
Let me say again, the vast majority of telemarketers are
legitimate business people attempting to sell a particular
product or service. But some are not.
I am interested in examining the two bills that are before
us today, but I am also interested in hearing from our
witnesses on a couple of other topics concerning telemarketing
practices. I am particularly concerned about two articles that
appeared within the last several days in the Washington Post
and in Roll Call regarding a company that is a constituent of
mine. I am hopeful that, as a product of their presence here
today, that they will be able to comment on those articles and
some of the suggested allegations that are embodied in them.
In that sense, while I am looking forward to the debate on
the new policies regarding telemarketing that are part of this
hearing--they are important--I also want to make sure that the
Congress is conducting proper oversight on the enforcement of
the laws that we have already promulgated.
Concerning the case presented in Roll Call, I understand
that the FTC does not investigate complaints about a for-profit
company when they are contractors for a nonprofit or political
entity. It is also my understanding that the limitations on
for-profit advertising and telemarketing are much more rigorous
than nonprofit or political entities. I believe that is why the
FTC does not get involved in such matters.
While the FTC doesn't, I believe the FCC does. If not, I
would like to know who does investigate telemarketing
activities contracted out to a nonprofit or political entity
from a for-profit. It seems to me there is a rather large gap
in the law if, in fact, no one has the authority to invetigate
these matters.
In reviewing the testimony I think Mr. Brubaker put it best
when explaining why rules should apply across the board
regardless of nonprofit, for profit or political status. I
quote from page 6 of his testimony: ``Our experience has been
that those who profess to be annoyed at telemarketing contacts
are not selectively annoyed, they are universally annoyed,
regardless of who the caller is.'' A telemarketing violation
should be subject to the same punishment under the law
regardless of who sponsored the call.
Let me also mention that, in just looking through all of
this, I came across a report from the Ohio attorney general
citing a Better Business Bureau standard avering that a
reasonable telemarketing campaign is defined by a return of 65
percent of every donated dollar to the nonprofit. I would
welcome alternative views about that and whether or not that is
an appropriate standard to apply to telemarketers.
Finally, just let me say, Mr. Chairman, I am interested in
hearing from our colleague, Mr. Frelinghuysen, if, in fact,
H.R. 3100, the Know Your Caller Act, would apply to for profits
working for nonprofits. I am curious to know whether H.R. 3100
would address the ability of the FCC and the FTC to investigate
and regulate in those situations.
With that, Mr. Chairman, I yield back the balance of my
time.
Mr. Tauzin. I thank my friend.
I wonder if the original namesake of yours, Tom Sawyer,
would have used telemarketing to get someone to come and paint
his fence for him?
Mr. Sawyer. He might have. But, given the connotations of
the term ``white wash'', we might use that as well.
Mr. Tauzin. I thank my friend.
We welcome our first panel. If our two colleagues would
join us at the witness table.
While they are joining us, we want to announce on the
second panel we will be hearing from the Federal Trade
Commission, from Ms. Harrington, about what is going on in the
Federal Trade Commission in this area. And we will have other
representatives, including the State of Arizona House of
Representatives and also from the American Association of
Retired Persons and the American Telemarketers Association, so
we get a good sense of what is going on not only in the States
but in the industry and seniors who very often are the ones who
complain to us about the kinds of telemarketing frauds that
might occur in the middle of all this good business.
Mr. Sawyer. Mr. Chairman, if I might interrupt, would it be
possible to put those two articles in the record?
Mr. Tauzin. Without objection, the articles will be
introduced into the record.
[The articles referred to follow:]
[Sunday, June 4, 2000--Washington Post]
Politics
By Mike Allen
Since March, the calls have been going out to thousands of doctors,
telling them they have been ``nominated for a national leadership
award'' that is ``given to doctors, dentists and community leaders.''
The caller says the invitation is from House Majority Whip Tom
DeLay (R-Tex.), who is ``Pulling out all stops to finally allow
physicians like you to have a voice in the health care debate, and to
do that, we've created the Physicians Advisory Board.
The doctors are assured that it's ``a completely honorary
position'' that won't take time away from their busy schedules.
The callers are telemarketers from the National Republican
Congressional Committee. Physicians who sound interested are invited to
call an 800 number, where the find out they can join the ``board'' a
get a handsome certificate for their office walls for a contribution of
$300 or more.
Jim Wilkinson, communications director for the House Republicans,
said the pitch is one of the committee's most successful programs, and
he said the only complaint he has heard is from a Democrat.
``This is a voluntary program,'' Wilkinson said. ``If people
support us, they give us money. If they don't like us, they don't give
us money. It's called freedom.''
Doctors are called at their offices, not at hospitals. The
telemarketers say they are ``calling from Congressman Tom DeLay and the
Physicians Advisory Board in Washington.''
The telemarketers are told to brush off efforts to take the doctor
away from a patient by saying, ``We don't want to interfere with
patient care.'' But then the script tells them to add that they'd
``very much like to have Doctor [blank] serve with us, so I hope you'll
have him (or her) call me as soon as he (or she) has a chance.''
House Republicans have a similar program designed to reach small-
business owners.
John DelCecato, a spokesman for the Democratic Congressional
Campaign Committee, called the solicitation ``deceptive'' and
``shameless.''
Wilkinson replied that House Republicans have out-raised House
Democrats ``because we're using cutting-edge methods to rally our
supporters.''
``Democrats are screaming, so it must be working,'' he said.
______
[Monday, June 12, 2000--Roll Call]
Doctors Angered By Fundraising Calls Offering Award in Swap for
Donation
By John Bresnahan
In the midst of a high-stakes battle on Capitol Hill over health
care, House Majority Whip Tom DeLay (R-Texas) is offering doctors a
chance to join a ``physicians advisory board'' in return for campaign
contributions.
Democratic officials claim to have received complaints from doctors
in at least four states, including New York and California, targeted by
DeLay and the National Republican Congressional Committee during the
effort.
A call received last week by Dr. Charles DeCarli, a neurologist at
the University of Kansas Medical Center, was typical of the DeLay
program.
DeCarli's assistant was told her boss was being ``recommended for a
national award'' by the Texas Republican, and was given an 800 number
for DeCarli to contact.
But when DeCarli called back the number of the ``Physicians
Referral Service'' that had placed the call, he was told it was
actually a fundraising solicitation on behalf of the NRCC.
DeLay and the NRCC were offering DeCarli a chance to belong to a
``physicians advisory board''--but to do so would cost DeCarli some
money.
Another call to DeCarli said he would be made an ``honorary
chairman'' of the advisory board if he gave $300 to $500.
In return, DeCarli would get his name in an upcoming ad in The New
York Times placed by the ``advisory board,'' as well as the chance to
participate in conference calls with influential Members of Congress,
although those lawmakers were not named.
DeCarli said he was told directly that he would have to make a
donation in order to become an honorary chairman.
``I felt very offended by this,'' said DeCarli, a self-proclaimed
``rabid Democrat.''
``I thought the assumption was that the Congressman was interested
in a national award I had won,'' he said in an interview. ``It was
really insulting to me.''
Another Kansas-based doctor, speaking on the condition of
anonymity, was told she ``received a national award.''
``They didn't say they were a political party or anything,'' said
the doctor.
InfoCision Management Corporation, an Akron, Ohio-based
telemarketing firm that often runs such programs for the NRCC, is
placing the calls.
A supervisor named Brian Gray at the physicians Referral Service,
which placed the call to DeCarli, insisted the award ``doesn't cost
anything,'' although he acknowledged that the calls were designed to
raise money for the NRCC.
InfoCision officials didn't return several calls seeking comment.
``We've received half a dozen complaints here at the [Democratic
National Committee] from real doctors, some of them Republicans, who
resent this misleading appeal by the Republicans,'' said DNC Press
Secretary Jenny Backus.
``Now we know that they are willing to risk real patients' best
interests by calling doctors away from tending to patients to listen to
yet another fundraising appeal,'' she added.
GOP officials, for their part, dismiss the Democratic complaints as
much ado about nothing.
``It is my general understanding that this is a successful
fundraising program to grow the majority by getting citizens to
participate,'' said Jonathan Baron, communications director for DeLay.
``Telemarketing is a standard aspect of fundraising and Mr. DeLay
wants to support the NRCC and its efforts,'' he added.
Baron said the script for the fundraising appeal was appropriate
and denied that there was any link between GOP efforts to solicit money
from doctors at the same time health care legislation is high on the
House's legislative schedule.
Both the House and the Senate are scheduled to vote in the coming
weeks on various pieces of legislation covering HMO reform, a
prescription drug plan for Medicare recipients and a so-called
``Patients' Bill of Rights.''
Baron, however, insisted, ``When Washington is affecting peoples'
lives, voters have not only a right, but an obligation, to speak up.''
``The only people who seem to be mad about this voluntary program
are the Democrats because we out-raised them in the last quarter and
the cycle,'' said Jim Wilkinson, the NRCC communications director.
Several GOP insiders claim the organization has raised millions of
dollars through telemarketing programs focusing on industry groups
facing legislative initiatives, including the program targeting
doctors. And much of the success of the NRCC's fundraising campaign
relies on DeLay's popularity.
The NRCC devotes considerable time and resources to its
telemarketing efforts, despite all of the media attention on
blockbuster fundraisers with big political stars such as Texas Gov.
George W. Bush (R). Telemarketing will account for as much as ``one-
third'' of the $130 million-plus the NRCC expects to rake in this
cycle. according to an informed GOP source.
Republican leaders also used a similar program during the last
election cycle, although that too attracted complaints.
Late in 1998, the NRCC, using then-Speaker Newt Gingrich's (R-Ga.)
name as the draw, placed tens of thousands of calls offering small-
business owners a ``national leadership award'' while at the same time
asking for a ``one time'' contribution to the party.
Mr. Tauzin. And the gentleman asked unanimous consent that
all written statements of our witnesses and of members be
allowed into the record, without objection.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Steve Largent, a Representative in Congress
from the State of Oklahoma
Mr. Chairman, thank you holding for this morning's hearing on H.R.
3100, the Know Your Caller Act, introduced by our colleague, Mr.
Frelinghuysen, and H.R. 3180, the Telemarketing Victims Protection Act,
introduced by our colleague, Mr. Salmon.
I believe that these two bills serve as a wake up call to the
telemarketing industry. I, along with most Members of Congress, have
received correspondence from constituents who are tired of receiving
calls from telemarketers during what is traditionally considered
``dinner time.'' They are further frustrated that when they go to
answer the phone, there is no one on the other end of the line because
the call has been generated by an autodialer.
In 1991, congress enacted the Telephone Consumer Protection Act
requiring telemarketers to follow ``do not call'' requests, restricting
telemarketing calling hours from 8:00 a.m. to 9:00 p.m., instructing
telemarketers to give the name of the solicitor, phone number and
address where that person can be contacted, as well as providing for a
private right of action.
In addition, the Federal Trade Commission has established
telemarketing sales rules requiring telemarketers to make certain
disclosures while banning fraudulent sales practices.
Despite these safeguards, consumers complaints continue to rise.
From 1997 to 1999, complaints to the FTC have grown from 2,260 to
17,423.
As a consumer myself, I too am sometimes annoyed by telemarketers,
and would hope that the telemarketing industry would do a better job in
policing itself. However, I think it is important to note that this is
an industry that employs 3.4 million people nationwide with annual
revenues of $550 billion. It's apparent that millions of Americans take
advantage of the opportunity to purchase goods and services offered by
telemarketers and therefore, we should carefully consider the impact of
restricting legitimate business practices.
One of my concerns is a provision included in both H.R. 3180 and
H.R. 3100 that would make it illegal for someone making a telephone
solicitation to circumvent a caller I.D. device. I believe that that is
a laudable goal, however, it's my understanding that many telemarketing
calls originate from T-1 or trunk lines that do not go through a local
switch, thus creating technological barriers to display the originating
phone number. To rectify this problem could cost millions of dollars.
I'm interested to learn if there are other alternatives to allow
consumers to determine who is calling without imposing an unfunded
Federal mandate.
My other concern is that H.R. 3180 exempts non-profit organizations
and political campaigns from the 5:00 p.m. to 7:00 p.m. do not call
period. I suspect that people who don't want to be called by commercial
telemarketers during these particular hours do not want to be called
regardless of who is making the solicitation.
I commend the authors of these two bills for raising the awareness
on this issue. And once again, I believe the legislation before us
serves as a wake up call to the telemarketing industry that it needs to
balance people's privacy with their own commercial interests.
Mr. Chairman, I look forward to hearing from our witnesses and I
yield back.
______
Prepared Statement of Hon. Barbara Cubin, a Representative in Congress
from the State of Wyoming
Thank you, Mr. Chairman, for holding this important legislative
hearing on two bills that would further restrict the activities of
telemarketing companies.
Although marketing and selling products over the telephone is an
important way in which companies provide their customers with goods and
services, there's no question that many people find the constant
barrage of telemarketing phone calls one of the most annoying
occurrences in our society today.
Legislative and regulatory measures have tried to protect consumers
from abuses, but a few bad actors have given the telemarketing industry
a black eye.
I understand the necessity of legislating additional measures to
protect the public from telemarketing abuses.
It worries me, however, that the legislative initiatives before us
today seem to blur the lines between a phone solicitor and someone who
has a legitimate reason for not wanting their identity known when
placing a phone call.
For example, my husband is a physician and frequently makes calls
from our home in Wyoming to his patients.
We have a caller I.D. block on our phone because we don't
necessarily want those who we call to know our home phone number. That,
I'm sure, is not uncommon.
H.R. 3100 makes it unlawful for any person, in making any telephone
solicitation, to interfere with or circumvent the ability of a caller
I.D. service.
I would like the author of the legislation, who will be testifying
on behalf of his bill this morning, to clarify where the line will be
drawn between a telephone solicitor and a person who makes business
calls from their house and wants their privacy protected.
Furthermore, how do the proper federal and state agencies go about
regulating and enforcing these laws and drawing these seemingly narrow
lines?
I have some of these same concerns regarding the other bill we are
considering today.
Although both bills merit a great deal of attention and must be
thoughtfully considered to protect consumers from intrusive and
annoying telemarketers, this Subcommittee must take into consideration
the sometimes ill-gotten side effects that this type of all-
encompassing legislation brings about.
Mr. Chairman, I look forward to learning more about these issues
and getting some answers to the questions I have just outlined.
Thank you. I yield back the balance of my time.
______
Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
Thank you, Mr. Chairman.
For years this Committee has reviewed the regulation of unwanted
solicitations to consumers. Of specific concern today is telemarketing.
As you all know, this particular business practice has been, and
continues to be, a controversial one.
There are thousands of reputable telemarketing companies that
provide a benefit to consumers by offering a broad range of consumer
options and opportunities. In fact, we will hear from one such company
today.
Increasingly, however, consumers are concerned about their personal
privacy, claiming that telemarketers are intruding into their homes.
Moreover, we continue to hear stories about fraudulent telemarketing
scams that separate citizens from their savings. The telemarketing
complaints lodged with the Federal Trade Commission seem to underscore
these concerns--in 1997 there were 2,260 complaints--in 1999, that
number rose to 17,423.
We must be vigilant to ensure that the consumers' concerns for
privacy and safety are addressed. However, we must be also be mindful
of striking the appropriate balance between the consumers right to
privacy and safety, and the telemarketer's legitimate business
interests.
I look forward to learning more about the two bills that have been
introduced in the House to address telemarketing. I remain interested
in finding ways to protect consumers as well as our thriving commercial
industry.
I thank today's witnesses in advance for their thoughtful testimony
and I thank Mr. Tauzin for holding this hearing this morning.
______
Prepared Statement of Hon. Gene Green, a Representative in Congress
from the State of Texas
Mr. Chairman: How many of us have sat down at night to have dinner
with our families and had the phone ring?
Is that phone call a friend or family member? Probably not.
If you eat dinner between 5 p.m. and 7 p.m. at night then that call
is probably a telemarketer.
We have all been asked to buy something over the phone from life
insurance to burial plots.
For some people this type of information is useful and provides
companies with an inexpensive way to reach a target consumer group.
However, for most consumers telemarketers represent a daily
unavoidable annoyance.
But, consumers can take steps to limit the number of calls
telemarketers make to their homes.
By purchasing caller identification systems and placing your name
on industry ``do-not-call'' lists consumer can limit the number of
calls they receive.
Unfortunately, attempts by consumers to limit sales calls using
caller ID is running into problems.
The telemarketing industry, while not an official policy, is using
readily available technology to hide their true identity from consumers
caller ID devices.
I am pleased that Mr. Frelinghuysen's bill would make it illegal
for telemarketing companies to ``interfere or circumvent'' caller ID.
I would not answer the phone if I knew I was about to get a sales
pitch.
In addition, Mr. Salmon's legislation will reserve more of the
dinner time for uninterrupted family time by not allowing telemarketing
calls to start until after 7 p.m.
Currently, telemarketers can call your home between the hours of
the 8 a.m. and 9 p.m.
Even though you can receive calls at just about anytime during the
day it is the dinner hour when most sales calls are placed.
While I understand that 5 p.m. to 7 p.m. is the time telemarketers
most likely to catch consumers.
Calls at this hour disrupt one of the only daily events that all
family members are present.
This time is even more important given the fact that parents are
working longer hours and seeing their families less and less.
Mr. Chairman, I support both bills because they empower our
constituents with the ability to regulate whom they receive calls from.
I think these are both important pieces of legislation and I look
forward to hearing the panel discussion on the benefits each will
provide our constituents.
Thank you Mr. Chairman and I yield back the balance of my time.
Mr. Tauzin. We will proceed now to hearing from our two
colleagues. First of all, the Honorable Matt Salmon, who will
be telling us a little bit about the Telemarketing Victim
Protection Act, H.R. 3180. Mr. Salmon.
STATEMENT OF THE HON. MATT SALMON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ARIZONA
Mr. Salmon. Thank you, Mr. Chairman. I commend you for
bringing attention to this important matter and for your work
on protecting consumers.
As you know, last year I introduced the Telemarketing
Victims Protection Act of 1999, also known as the Do Not
Disturb My Dinner Act. Actually, I think the biggest opponents
of this legislation are the makers of Alka Seltzer and Pepto-
Bismol because their sales flourish when their telemarketers
call during the dinner hour. It is a joke.
Mr. Tauzin. ``Tums up'' for that.
Mr. Salmon. It is also interesting to note, I was recently
on a talk show program--popular radio talk show program back in
Arizona; and part of my bill actually disallows the
telemarketers from calling during the dinner hour, which is
important to especially us family people with children who
don't get an opportunity to see most of them during the day.
Dinner hour is the only time we really get to talk, and it
really is frustrating to be disturbed during that time.
But when I announced to him that this bill would disallow
them from calling between the hours of 5 and 7, he said, I
don't like your bill. I said, really? You think that is too
intrusive, too heavy-handed government? He said, no, I want you
to ban them 24 hours a day.
The bill directs the Federal Trade Commission to promulgate
rules and regulations which require telemarketing firms to
notify consumers that they are eligible to be placed on State
do-not-call lists. If a consumer elects not to be called, the
telemarketing firm must report that request to the appropriate
State or national authority. Additionally, the legislation
prohibits telemarketing firms from blocking the identity of
their phone number in order to evade caller ID services.
Mr. Chairman, I have the same experience. My parents bought
the call blocking device, and my father just had open heart
surgery. I can't call him from Washington, DC. I have to call
and wait. And it is sad that we have come to this, that people
have to spend money out of their pockets to try to protect
their privacy.
To that end, I also support Congressman Frelinghuysen's
bill, which would achieve the same result.
Furthermore, the bill requires telemarketing firms to
obtain and reconcile with their own lists the appropriate do-
not-call list. It also amends the time of day telemarketers are
allowed to call, as I mentioned earlier. Under current law, the
telemarketers are prohibited from calling consumers from
between the hours of 8 a.m. and after the hours of 9 p.m. As I
mentioned, my bill would amend current law to prohibit pesky
telemarketers from disturbing families during the dinner hours.
My legislation does not affect organizations that are already
exempt from the current law.
As you know, Congress has spent the last decade trying to
help consumers cope with an industry which at times is out of
control. The problem is twofold--consumers are being robbed of
their money and privacy.
Despite Congress' efforts, great advances in technology
have helped enable fraudulent telemarketers to continue to
flourish. According to numerous sources, it is estimated that
consumers lose $40 billion a year to fraudulent telemarketers.
As fraudulent telemarketing operations become more
sophisticated, so must our laws governing the industry.
Many consumers--especially seniors in my home State--have
been victimized. The FTC has repeatedly reported that the
elderly are disproportionately represented among victims of
telemarketing fraud. If fact, it seems like Arizona has become
a haven for the business of fraudulent telemarketers. According
to the FBI, Arizona continues to be a high target area for
illegal telemarketers due to the State's significant number of
elderly residents. They believe that the average Arizona victim
loses between $20,000 to $100,000.
Some telemarketing firms believe that my bill will not help
combat fraud. They are wrong. My bill clearly redefines for
telemarketers what is legal and what is fraudulent. If we arm
law enforcement with clear, no-nonsense regulations, I believe
that we will enhance their ability to crack down on
telemarketing fraud.
The Telemarketing Victims Protection Act amends current
Federal law to subject violators of FTC telemarketing sales
rules to civil penalties of up to $10,000 per violation. And,
finally, it requires the FTC to study and recommend appropriate
penalties for telemarketers who repeatedly violate the law.
Opponents also argue that banning dinner time calls will
only increase the number of post-dinner time calls. This is a
ridiculous argument to not pass the bill. We shouldn't be held
hostage to those who continually violate our privacy with
unwarranted, unsolicited calls.
As I mentioned previously, it is just as important to
protect consumers from assaults on their privacy. Even law-
abiding telemarketing firms seem to push the limits of decency.
Many States are beginning to recognize that telemarketers are
invading people's privacy. Texas, California, Georgia, Indiana,
Pennsylvania, Florida, Missouri, Colorado, New York, Idaho,
Maryland and Pennsylvania, to name a few, have or are
considering legislation to set up a do-not-call list.
Last year, the legislature in my home State reformed its
laws governing in-State telemarketing. The new law, which will
be described in greater detail later by Arizona Representative
Jeff Hatch-Miller, goes a long way to protecting the privacy of
Arizonans. It prohibits telemarketers from call-blocking their
number, limits automated random dialing, prohibits
intentionally dialing cellular phones or pagers, prohibits
phoning prerecorded messages without your prior consent, and
requires these businesses to maintain a do-not-call list. As
usual, meaningful reform begins at the State level and my bill
will enhance these efforts.
Most consumers are not even aware of their rights dealing
with professional telemarketers. A survey by the American
Association of Retired Persons, AARP, found that seniors, on
the whole, were less familiar with their consumer rights than
younger people, and they were less suspecting of deceptive
sales practices. For consumers who know their rights and ask to
be placed on a do-not-call list, it usually takes months before
their request is honored--if at all.
Invading the privacy of consumers doesn't seem to concern
many of these telemarketing businesses. That is why I believe
that my legislation, particularly the consumer information
section, is desperately needed. The FTC, which has been working
diligently on this matter, agrees with me. Recently, the FTC
Chairman Robert Pitofsky wrote me to say that the Commission
generally favors the underlying goal of H.R. 3180, which is to
support consumer choice in the matter of whether to receive
telemarketing calls.
The FTC is simply reflecting our Nation's desire to protect
our privacy. Recently, AARP released findings in New York of a
poll that showed the majority of people surveyed by an
independent pollster favored stricter telemarketing regulation
of telemarketers. In Minnesota, 86 percent of the 1,021 adults
polled earlier this year said they favor a State-run do-not-
call list that they could sign to keep telemarketers away. When
contacted, Gary Winter, a 54-year-old teacher from Rochester,
said, ``I think our privacy is overly invaded. If I want to
talk to someone, I will call them.''
In Denver, polls overwhelmingly support legislation to curb
telemarketing practices. In a Statewide poll conducted by Dan
Jones & Associates, 85 percent of the respondents said they
favor creating such a no-call list in Utah; and 84 percent
indicated they would like to put their names on it.
The issue is neither partisan nor political. Leaders on all
sides of the political spectrum have joined in the fight to
help protect consumers against telemarketing abuses, including
President Clinton and Republican Presidential nominee George W.
Bush. And my bill is cosponsored by 40 percent on both sides of
the aisle.
I believe this issue is best summarized by a recent Buffalo
News editorial which said that ``telemarketing has gotten
completely out of control, with seemingly no outside
regulation. It is an invasion of privacy and has made me a
prisoner in my own home.''
Again, I thank you for holding this important hearing; and
I urge my colleagues on the committee to move forward with a
comprehensive telecommunication privacy bill which provides
consumers with the protections sought by Mr. Frelinghuysen and
myself.
[The prepared statement of Hon. Matt Salmon follows:]
Prepared Statement of Hon. Matt Salmon, a Representative in Congress
from the State of Arizona
Mr. Chairman, I commend you for bringing attention to this
important matter and for your work on protecting consumers. As you
know, last year I introduced the Telemarketing Victims Protection Act
of 1999, also known as the Do Not Disturb My Dinner Act. The bill
directs the Federal Trade Commission (FTC) to promulgate rules and
regulations which require telemarketing firms to notify consumers that
they are eligible to be placed on national and state do-not-call lists.
If a consumer elects not to be called, the telemarketing firm must
report that request to the appropriate state or national authority.
Additionally, the legislation prohibits telemarketing firms from
blocking the identity of their phone number in order to evade caller ID
devices. Furthermore, it requires telemarketing firms to obtain (and
reconcile with their own lists) the appropriate do-not-call list. It
also amends the time of day telemarketers are allowed to call
consumers. Under current law, telemarketers are prohibited from calling
consumers before 8 a.m. or after 9 p.m. My bill would amend current law
to prohibit pesky telemarketers from disturbing families during dinner
hours. My legislation does not affect organizations already exempt from
current law.
As you know, Congress has spent the last decade trying to help
consumers cope with an industry that, at times, is out of control. The
problem is twofold--consumers are being robbed of their money and their
privacy. Despite Congress' efforts, great advances in technology have
enabled fraudulent telemarketers to continue to flourish. According to
numerous sources, it is estimated that consumers lose $40 billion a
year to fraudulent telemarketers. As fraudulent telemarketing
operations become more sophisticated, so must our laws governing the
industry.
Many consumers--especially seniors in my home state--have been
victimized. The FTC has repeatedly reported that the elderly are
disproportionately represented among victims of telemarketing fraud. In
fact, it seems like Arizona has become a haven for the business of
fraudulent telemarketers. According to the FBI, Arizona continues to be
a high target area for illegal telemarketers due to the State's
significant number of elderly residents. They believe that the average
Arizona victim loses $20,000 to $100,000.
Some telemarketing firms believe that my bill will not help combat
fraud. They are wrong. My bill clearly redefines for telemarketers what
is legal and what is fraudulent. If we arm law enforcement with clear,
no-nonsense regulations, I believe that we will enhance their ability
to crack down on telemarketing fraud. The Telemarketing Victims
Protection Act amends current federal law to subject violators of FTC
telemarketing sales rules to civil penalties of up to $10,000 per
violation. And finally, it requires the FTC to study and recommend
appropriate penalties for telemarketers who repeatedly violate the law.
Opponents also argue that banning dinner time calls will only increase
the number of post-dinner time calls. This is a ridiculous argument not
to pass this bill. We shouldn't be held hostage to those who
continually violate our privacy with unwanted, unsolicited calls.
As I mentioned previously, it is just as important to protect
consumers from assaults on their privacy. Even law-abiding
telemarketing firms seem to push the limits of decency. Many states are
beginning to recognize that telemarketers are invading people's
privacy. Texas, California, Georgia, Indiana, Pennsylvania, Florida,
Missouri, Colorado, New York, Idaho, Maryland, and Pennsylvania, to
name a few, have or are considering legislation to set up a do-not-call
list. Last year, the legislature in my home state reformed its laws
governing in-state telemarketing. The new Arizona law, which will be
described in greater detail by Arizona Representative Jeff Hatch-
Miller, goes a long way to protecting the privacy of Arizonans. It
prohibits telemarketers from call-blocking their number, limits
automated random dialing, prohibits intentionally dialing cellular
phones or pagers, prohibits phoning pre-recorded messages without your
prior consent, and requires these businesses to maintain a no-call
list. As usual, meaningful reform begins at the state level and my bill
will enhance these efforts.
Most consumers are not even aware of their current rights dealing
with professional telemarketers. A survey by the American Association
of Retired Persons (AARP) found that seniors, on the whole, were less
familiar with their consumer rights than younger people, and they were
less suspecting of deceptive sales practices. For consumers who know
their rights and ask to be placed on a do-not-call list, it usually
takes months before their request is honored--if at all.
Invading the privacy of consumers doesn't seem to concern many of
these telemarketing businesses. That is why I believe that my
legislation, particularly the consumer information section, is
desperately needed. The FTC, which has been working diligently on this
matter, agrees with me. Recently, the FTC Chairman Robert Pitofsky
wrote me to say that ``the Commission generally favors the underlying
goal of H.R. 3180, which is to support consumer choice in the matter of
whether to receive telemarketing calls.''
The FTC is simply reflecting our nation's rising desire to protect
our privacy. Recently, AARP released findings in New York of a poll
that showed the majority of people surveyed by an independent pollster
favored stricter regulation of telemarketers. In Minnesota, eighty-six
percent of the 1,021 adults polled earlier this year said they favor
establishing a state-run ``don't call'' list that they could sign to
keep telemarketers away. When contacted, Gary Winter, a 54-year-old
teacher from Rochester said ``I think our privacy is overly invaded. If
I want to talk to someone, I'll call them.''
In Denver, polls overwhelmingly support legislation to curb
telemarketing practices. And, in a statewide Deseret News/KSL-TV poll
conducted by Dan Jones & Associates, 85 percent of the respondents said
they favor creating such a no-call list in Utah--and 84 percent
indicated they would like to put their names on it.
The issue is neither partisan nor political. Leaders on all sides
of the political spectrum have joined in the fight to help protect
consumers against telemarketing abuses--including President Clinton and
Republican Presidential nominee George W. Bush. And, my bill is
cosponsored by 40 members from both sides of the aisle. I believe the
issue is best summarized by a recent Buffalo News editorial which said
that telemarketing ``has gotten completely out of control, with
seemingly no outside regulation. It is an invasion of privacy and has
made me a prisoner in my own home.'' Again, I thank you for holding
this important hearing and I urge my colleagues on the committee to
pass these bills.
Mr. Tauzin. Thank you, Matt.
Now we will hear about the Know Your Caller Act of 1999.
Rodney.
STATEMENT OF HON. RODNEY FRELINGHUYSEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Frelinghuysen. Thank you, Mr. Chairman and members, for
the opportunity to appear before your committee along with my
colleague, Congressman Salmon, to talk in support of my bill
H.R. 3100, the Know Your Caller Act.
As you know, Mr. Chairman, our bills are similar. We hope
we can work out the differences. I believe the bills are
straightforward and provide a simple but important consumer
protection.
Mr. Chairman, here is a caller ID box. This happens to be a
Bell Atlantic caller ID box. Incidentally, 30 percent of Bell
Atlantic customers, or about 8 million of them, have these
caller ID boxes, so a lot of people have them.
Many consumers or constituents purchase and pay for this
service for several reasons: first and foremost, to protect
their privacy; second, to provide for their safety and security
by identifying incoming calls and to allow them the opportunity
to decide before picking up the receiver whether they want to
answer that call or not.
But, guess what? Some of the most frequent calls from those
telemarketers appear with the message ``Out of the Area.'' Mr.
Chairman, telemarketing is a commercial enterprise, as we know.
As such, what would be the reason for not disclosing your
business telephone number? There simply is none. I believe that
all commercial enterprises that use the phone to advertise or
sell their services, to solicit contributions, to encourage the
purchase of property or goods, or for any commercial purpose
should be required to have the name of their business and their
business telephone number disclosed on caller ID boxes.
Telemarketing enterprises block out caller ID. Yet these same
companies know your name, your address, and your telephone
number. Isn't it only fair that they share their company name
and telephone number so a person can make sure that they are
actually legitimate callers?
Also, if you are like me and politely ask to have your name
removed from their list, I think you should also be able to
track the name and number of these callers to ensure that they
don't call back again. My legislation will simply require any
person making a telephone solicitation to identify on their
caller ID devices their names and their telephone numbers.
Mr. Chairman, this legislation will help separate the
legitimate telemarketers from fraudulent telemarketers. While a
majority of them are legitimate business people attempting to
sell a particular product or service, there are some
unscrupulous individuals and companies violating telemarketing
rules and scamming consumers.
Consumers, as we are aware, pay a monthly fee to subscribe
to the caller ID service because they want to protect their
privacy and their pocketbooks. But they have little recourse
because most telemarketers intentionally block their identity
from being transmitted to caller ID devices.
Mr. Chairman, we already require telemarketers to identify
themselves over the telephone and via telephone fax
transmissions. This bill would extend that protection by giving
full disclosure to consumers with caller ID devices.
H.R. 3100 won't solve all problems, but it will provide
some additional consumer protection.
In closing, when someone knocks at your door, don't you
usually look out the window to see who it is before answering
it? Well, caller ID acts as a window to let you know who is
calling before you answer the telephone.
Mr. Chairman, I thank you for the public service you and
your committee are rendering by having this hearing and
encourage to you take a serious look at both of our pieces of
legislation.
[The prepared statement of Hon. Rodney Frelinghuysen
follows:]
Prepared Statement of Hon. Rodney P. Frelinghuysen, a Representative in
Congress from the State of New Jersey
Thank you, Chairman Tauzin, for the opportunity to appear before
your subcommittee today along with my colleague, Congressman Salmon, to
testify in support of my bill, H.R. 3100, the Know Your Caller Act. As
you know, Mr. Chairman, Congressman Salmon and I have similar bills
pending before your subcommittee. Both bills are very straightforward,
and provide a simple but important consumer protection. It is my hope
that Congressman Salmon and I can work out any small differences
between our two bills, and provide you with one bill that will be
favorably considered by your subcommittee.
Mr. Chairman, here is a ``caller ID box.'' Many consumers purchase
and pay for this service for several reasons: to protect their privacy,
to provide security by identifying an incoming call and to allow them
the opportunity to decide before picking up the receiver whether or not
to answer the call.
But, guess what? Some of the most frequent calls--those from
telemarketers--appear with the message ``Out of the Area.'' Mr.
Chairman, telemarketing is a commercial enterprise. As such, what would
be the reason for not disclosing your businesses telephone number?
There simply is none. I believe that all commercial enterprises that
use the phone to advertise or sell their services, to solicit
contributions, to encourage the purchase of property or goods, or for
any other commercial purpose, should be required to have the name of
their business and their business telephone number disclosed on caller
ID boxes. Telemarketing enterprises block out caller ID. Yet, these
same companies know your name, your address and your telephone number.
Isn't it only fair that they share their company name and telephone
number so a person can make sure that they are a legitimate company.
Also, if you are like me, and politely ask to have your name
removed from their list, I think you should also be able to track the
name and number of these callers to ensure that they don't call back
again. My legislation will simply require any person making a telephone
solicitation to identify on caller ID devices their names and their
telephone numbers.
Mr. Chairman, this legislation will help separate the legitimate
telemarketers from fraudulent telemarketers. While a majority of
telemarketers are legitimate business people attempting to sell a
particular product or service, there are some unscrupulous individuals
and companies violating telemarketing rules and scamming consumers.
Consumers, pay a monthly service fee to subscribe to caller
identification service because they want to protect their privacy and
their pocketbooks. But, they have little recourse because most
telemarketers intentionally block their identity from being transmitted
to caller ID devices.
Mr. Chairman, we already require telemarketers to identify
themselves over the telephone and via telephone fax transmissions, this
bill would extend that protection by giving full disclosure to
consumers with caller ID devices.
H.R. 3100 won't solve all problems, but it will provide some
additional consumer protection.
In closing, when someone knocks at your door, don't you usually
look out the window to see who it is before answering it? Well, caller
ID acts as a window to let you know who is calling before you answer
the telephone.
Mr. Chairman, thank you again for allowing me to testify before you
today and I hope you will favorably consider my proposal.
Mr. Tauzin. Thank you very much, Rodney.
Let me start by recognizing myself for 5 minutes and
members in order and see if we can understand a little bit more
about the bills and the underlying reasons and the philosophy
of the two bills. They are a little different.
Obviously, Matt, you have got some of Rodney's protections
in your own bill, but you go further by allowing the creation
of the State-run don't call list. Let me ask you, first of all,
the bill doesn't start with the presumption that people can't
call you during those hours. It starts with the presumption
that they can unless you have said no, unless you have put your
name on a list that says don't call within these hours. Right?
Mr. Salmon. Right.
Mr. Tauzin. So it is, essentially, an opt-out that the
industry can--the telemarketers can call me unless I decide I
want out, I don't want you to call now, put my name on the
State-run list, is that right?
Mr. Salmon. Well, if they put themselves on a do-not-call
list, then the telemarketer cannot call for any reason at any
time. My bill currently under Federal law or under FTC
regulations, they cannot call before 8 in the morning at all,
they cannot call after 9 at all, anybody, whether they are on a
do-not-call list or not. My bill would also add to those
requirements the dinner hour.
Mr. Tauzin. So in that hour it is an absolute prohibition
against calling.
Mr. Salmon. An absolute prohibition.
Mr. Tauzin. Suppose I don't mind, I want people to call me
then, your bill would prohibit that?
Mr. Salmon. During the dinner hour, it would.
Mr. Tauzin. Who operates the State do-not-call list and who
pays for it?
Mr. Salmon. The State do-not-call lists, in different
States they are handled differently. Some are handled by
nonprofit organizations; some are handled by the State entities
themselves. But I think it would work hand in hand with the
States that do set up.
Mr. Tauzin. In the case, though, where you are federally
mandating it, you know we do have a provision that we were very
successful in passing in Congress. We were not going to mandate
the cost on the States without putting up the money. Does this
create a cost on the State that we may have to fund?
Mr. Salmon. It doesn't tell the States how they have to set
up a do-not-call system, so it doesn't say that you have to set
up----
Mr. Tauzin. It may or may not.
Mr. Salmon. Right.
Mr. Tauzin. The phone book itself is a fairly good
example--in fact, it was used as an example of an opt-out
system in our recent privacy seminars in Lansdowne. The phone
book was described as essentially that, as a great opt-out
mechanism. Our names are all in that phone book. Our phone
numbers, our addresses are in that phone book. And the phone
company doesn't have to call each one of us and ask us and fill
out forms and we don't have to go through an expensive and very
difficult process of getting our names in the phone book. In
fact, we get upset when they leave us out, which happened in my
own community just recently and the--some of the local
businesses were left out. They raised hell. They want to be in
that phone book.
But any time I want I can call them up and say I don't want
to be in the next phone book. I want an unlisted number. I want
my number listed, but I don't want to you have my address
listed. I don't want people knocking on my door.
So it is a very good opt-out system. Why doesn't that work?
I want to keep people from calling me at any hours of the day,
I can just get an unlisted number and give the number out to my
friends.
Mr. Salmon. You may want to be accessed by people in your
church, coworkers. You may not know exactly everybody that may
have a reason to call you at any given point in time.
I think that the point here is we do have regulations in
virtually every city in America as far as sales, door-to-door
sales, when they can approach your home, when they can't. With
the new technologies actually knocking on a person's door isn't
required anymore, but you can call them on the phone.
Mr. Tauzin. Well, Rodney, you mentioned that. So let me
switch to you very quickly.
Mr. Frelinghuysen. My bill only requires telemarketers not
to intentionally interfere with these devices. People buy
caller ID service, and they assume this is going to afford them
some protection.
Mr. Tauzin. I have one at home, and I am really upset
whenever I see unavailable or private call or out of market. I
can't tell who is calling me.
Mr. Frelinghuysen. But there are a lot of other
frustrations I would like you to address. You pay for this
service. This is primarily what I am aiming at.
Mr. Tauzin. If I pay for the right to look out the window
and see who is knocking at my door, I want to identify them.
You can't come in wearing a mask. You can't come in hooded. I
have to be able to see who you are before I let you in on my
phone in this case. We often do that in this committee. We
try--as we think through these new telemarketing e-commerce
issues, we try to think about how they apply in the brick-and-
mortar world and try to make rules that are comparable in the
new electronic world.
In this case, what you are saying is, sure, people can
knock on my door on most hours of the day. Some communities
have prohibitions against knocking on your door at certain
hours. A lot of that has to do with safety and interference and
privacy concerns. What you are saying is, in all cases where I
paid for the right to know who is calling me, I ought to be
able to know that; and no one ought to be able to block that.
You also made a very interesting statement that you can't
imagine a business who is trying to sell products that wouldn't
want me to know who they are. But there are a lot of businesses
like that, aren't there?
I am told of a business, for example, that calls our homes
just to find out if we are there, if we are answering the
phone, and they hang up quickly, and building data bases which
they then sell of people who are at home between the hours of 8
and 9 and 9 and 10 and 10 and 12 and 12 and 1. Those data bases
become valuable data bases for whom? For other telemarketers
who then can target the calls to people they know are home. So
there is all----
Mr. Frelinghuysen. Often, there is no voice on the other
end of the phone, which is even worse.
Mr. Tauzin. It is like the British Columbia machine that
was calling me. I was totally helpless there because the
machine wouldn't answer the phone so I could find out what was
going on. If I didn't have the help of law enforcement, I would
never have known whether I was being scammed or whether my
phone number was being co-opted to conduct a scam on someone
else and whether I would wake up 1 day to read a headline that
Congressman Tauzin's phone has been used to scam 20 senior
citizens. It could have happened. I didn't know if it was
happening.
So we have got some real problems here that I think your
two bills are attempting to address and going to wrap up. Then
I will move on.
Mr. Salmon. I want to further address the question about--
you asked about, doesn't the phone book actually provide the
kind of benefit that we need to enforce the privacy? I
personally have two phone lines at my home. One of them is
listed. The other one is not listed in the phone book. We still
get telemarketing known calls on the unlisted numbers.
Mr. Tauzin. Because of rotary dial. They just dial every
number. The computer just dials every conceivable number in
that area code and therefore picks up your unlisted number.
Mr. Salmon. My unlisted number gets nearly as many of these
unwanted unsolicited calls as my listed.
Mr. Frelinghuysen. Mr. Sawyer recognized the issue--I think
it was more than a rhetorical question--my legislation does not
affect organizations that are already exempt under current law.
So in terms of nonprofits, it would not interfere with
nonprofits.
Mr. Tauzin. I will give Mr. Sawyer a chance right now. Mr.
Sawyer is recognized for 5 minutes.
Mr. Sawyer. Thank you, Mr. Chairman. Those were really more
directed at the FTC and the FCC.
Mr. Frelinghuysen. Excuse me.
Mr. Sawyer. But I would expect that you would have done
exactly that.
How many States maintain do-not-call lists?
Mr. Salmon. There are very few currently that maintain do-
not-call lists.
Mr. Tauzin. Somebody is saying 11. Is that right?
Mr. Sawyer. Do you have any sense of----
Mr. Salmon. There are probably about another 10 to 15 that
are considering.
Mr. Sawyer. Do you have any sense of how those are paid
for? If we look to the brick-and-mortar counterpart, when you
opt out of the phone book you pay a fee for being unlisted in
order to maintain the work that it takes to do that. It would
seem to me that is one possible source of a revenue stream to
sustain a do-not-call list. Do you know whether that is done in
any----
Mr. Salmon. In our own State it is maintained by the
Secretary of State's Office. So it is actually covered for by
the State government.
Mr. Sawyer. I see. For either one of you, are there
particular areas that we ought to look for where there will be
problems in reconciling your two pieces of legislation?
Mr. Frelinghuysen. I think--generally, I wouldn't want to
characterize my colleague's bill as somewhat more restricted
than mine, but I think we can work out some differences. I
think we are on the same path. We have the same goals.
Mr. Salmon. The overall goal is privacy and invasion of
privacy, and we absolutely are more than happy to work together
to come up with something that works hand in hand together.
Absolutely.
Mr. Sawyer. Thank you, Mr. Chairman.
Mr. Tauzin. Thank you, Mr. Sawyer.
The Chair recognizes the gentleman from Georgia, Mr. Deal,
for a round of questions.
Mr. Deal. Thank you, Mr. Tauzin. I would yield to my
colleague, Mrs. Cubin.
Mrs. Cubin. Thank you very much, Mr. Deal.
I have but one question. As we are sitting here today,
everyone is well aware that we are talking about telephone
solicitors, someone trying to sell you something. But sometimes
when we pass legislation there are unintended consequences. I
just wanted to ask if you, both of you, think that this is
something that might need to be clarified in the language of
the bill or if it is something that would have an effect that
you would intend to happen.
As you know, I am married to a physician; and a lot of
times he calls from our home to patients' homes. Sometimes
those are return calls, and sometimes he calls to just check
and see how the patients are doing. And if everybody--if all of
his patients had his phone number, I can tell you he would
never have a day off and he would probably never get a full
night's sleep. So I wanted to make sure that there were some
exceptions like that that were included in your legislation or
find out if there were.
Mr. Salmon. If I can start, under current law, this only
affects telemarketing firms.
Mrs. Cubin. And in Rodney's bill the language says in
making any telephone--in any telephone solicitation. I just--
again, I just wanted to make sure that the doctor calling to
check and see how the patient is--and I don't know, sometimes
doctors--Wyoming they don't, but I know sometimes they do
charge for that call. I just want to make sure that that isn't
an unintended consequence.
Mr. Frelinghuysen. Private citizens can call block, and I
think there is a difference between commercial telemarketers
and, you know, individual physicians and professionals. Again,
I think there can be a distinction made.
Mrs. Cubin. I would be more comfortable if a distinction
were made in the legislation. Because I do think there are some
times--and I am all in favor of the privacy that you are trying
to achieve, absolutely. I just get furious when I get those
calls. But I just want to make sure that people aren't affected
that don't want to be or need not to be. Thank you.
Thank you, Mr. Chairman. I yield back to Mr. Deal.
Mr. Deal. I have two further questions or comments.
First of all, I think any time we undertake Federal
legislation on any issue there are two questions we should ask.
The first is, is it necessary that the Federal Government act,
as opposed to the States acting? We heard the comment about 11
States--and I believe mine is one of those--that has State
legislation. I would like to hear your comments a little more
detailed as to why States cannot adequately regulate this. I
assume part of this is across the State lines interstate
commerce.
The second question is, we do have Federal regulatory
agencies that supposedly can adapt regulations and rules to
meet changing situations. And we are going to hear from the FTC
I believe in just a minute. Would you comment on whether or not
you think there is adequate statutory authority currently to
address this by rule and regulation; and, if not, why is your
legislation necessary as a basis for further action?
Mr. Frelinghuysen. I am not qualified enough in the law to
tell you. I think the FTC could tell you. But all I can tell
you is that our constituents who pay for these devices feel
that these devices are being thwarted, and I assume that the
Commission can testify actually to what exists now and
substantiate that this is a national issue. And nothing in my
bill would preempt States, in some cases, enacting more
restrictive laws. The Commission has jurisdiction, but I just
don't know enough of their mission.
Mr. Salmon. The Congress has historically given this kind
of guidance to the FTC. The current laws under which the FTC
operates regarding telemarketing was promulgated by statute.
All I can say is that the FTC people that we have spoken with
are very supportive of the legislation that I have introduced.
Obviously, there are some gaps, some holes, because people's
privacy is still being invaded.
As far as the States rights issue, I mean, having served on
the State legislature--and I think I am just about as
conservative on that issue as anybody here--and having voted a
few years ago for the unfunded Federal mandates legislation, I
very much am cognizant of that issue. But we do have interstate
commerce going on. And the States really cannot do anything
when somebody from Texas or British Columbia is calling
Arizona. The Federal Government has to become involved.
Mr. Deal. One other quick question: In the event States do
not set up a do-not-call list, does your legislation mandate a
Federal do-not-call list?
Mr. Salmon. No.
Mr. Deal. Thank you, Mr. Chairman.
Mr. Tauzin. Thank the gentleman.
The Chair recognizes the gentleman from Texas, Mr. Green.
Mr. Green. Thank you, Mr. Chairman.
And to follow up my colleague from Wyoming, the concern
about physicians, my wife is a high school teacher, and one of
her requirements is that she call parents. And she will
intentionally not call from our house because of the caller ID.
Mr. Frelinghuysen. This is only for commercial
telemarketers. It is not for individuals, private citizens.
Mr. Green. Currently, I have a similar system on the phone
system I have in Houston to block calls that are not ID'd.
Mr. Salmon. It is not offered in all jurisdictions, but I
know it is the same way in my State. In fact, I think
Congressman Tauzin and myself were just talking about that
dilemma--I don't know if you have ever faced it--but my folks
have purchased that because they are sick and tired of these
telemarketers----
Mr. Frelinghuysen. You pay extra for it.
Mr. Salmon. [continuing] the other debate. Why should she
have to do that? But now I can't from--try to dial from
Washington DC or from your Washington office to one of those
phones, and you won't be able to get through.
Mr. Green. So we block ours?
Mr. Salmon. Yeah, for some reason, I can't call from my
office, and Congressman Tauzin is saying the same thing. My
father just recently had open heart surgery, and I have been
trying to get in contact with them. I can't call from the phone
here.
Mr. Green. Because we block our numbers going out.
Mr. Salmon. Right.
Mr. Green. Our district offices aren't that way, because I
have returned phone calls. And the constituents--the phone--
when they say U.S. Government, they think I am the IRS.
Mr. Salmon. It is also interesting--one of the arguments I
hear back from the people within the industry is, well, hey, if
they don't want the phone call--the phone book issue has been
brought up, and I think I have dealt with that. The other one
is, just don't answer your phone. If you are like me--I have
teenagers. They are out all over the place. Are they calling
because they are in need or are they calling because they have
a problem? I have elderly parents, one that has just had open
heart surgery. You can't just not answer the phone.
Mr. Green. When your children are past their teenage years
you are still wondering if that is them calling you.
Rodney, in your bill, in one of the parts of it, it says
that do-not-call lists are maintained by the Direct Marketing
Association, utilized only by DMA members. More specifically,
are the DMA members required to use that do-not-call list so
they don't keep contacting customers who have been added to
that list? I was under an impression that list was available,
but telemarketers aren't required to use that list.
Mr. Frelinghuysen. It is self-regulating. It is not
required.
Mr. Green. Because over a period of time--I don't know if
you have had heard from your constituents, but I have had
people contact me, and I have asked to be taken off the list. I
dump calls, and then I continue to get them. So what we do is
end up going to the--saying we will contact the FTC for you,
and if you will do it, we will so that telemarketers--direct
telemarketers are not required to use that list as a membership
of their organization.
Mr. Frelinghuysen. Legitimate businesses subscribe to that
list. We are after the fraudulent, illegal, illegitimate
businesses that totally ignore that list.
Mr. Green. Like my colleague again from Wyoming, I
understand the frustration because--not only personally but
also from our constituents. And, hopefully, we can put the two
bills together, not unlike Congressman Wilson and I did with
our spam bills. And thank you, Mr. Chairman, for that. Because
we have full committee mark-up for that and put the bills
together so we can address it.
Thank you, Mr. Chairman. I yield back.
Mr. Tauzin. Thank you, Mr. Green.
Let me announce to the committee that the spam language
apparently has been worked out. We are prepared to mark it up
in full committee tomorrow. So we might be prepared to deal
with that very important issue tomorrow.
The Chair is pleased now to welcome the gentleman from
Illinois, Mr. Shimkus, for a round of questions.
Mr. Shimkus. Thank you, Mr. Chairman. It is great to be
with my colleague here, and I appreciate their legislation.
I, too, like most consumers today, have the caller ID; and
I, like most consumers, they don't know who is calling us. But
I have--my phone number is listed; and, as Congressman Ehrlich
and I were talking, I probably receive less calls now today as
a Member of Congress at home----
Mrs. Cubin. Because you are never home.
Mr. Shimkus. [continuing] than I did with my other
employment. But this raised the issue, and I know for sure that
the calls originating from here to my home in Illinois are
blocked. And the industry has been telling me that call--and,
Matt, you were formerly in this business, is that correct?--
calls originating on a telephone service outside the consumer's
local area which are routed over a switchline that is different
from the consumer's local service provider will not allow the
caller's name or any other identification to be displayed. In
your research of legislation--obviously, I believe technology
can overcome all these obstacles, but the industry at least is
claiming that there are some obstacles in technology to do this
because of the, you know, the different service areas.
Mr. Salmon. My personal feeling is that we can--I know I
worked in telecommunications for 13 years before I came to
Congress, and these are issues that we can resolve.
Technologically, we can resolve these issues. I think this
debate is probably--to me, it is a cop-out just to say we can't
come up with a solution. We are smart enough to come up with a
solution. I think the technology exists that we can solve the
problem.
I mean, if worse came to worse, one of the reasons that
their calls are not identifiable is because they haven't an
automated system that does all the phone calling. If they go
back to the calling one by one where they have got the line of
people calling on the phones, those are identifiable. So, you
know, I really believe it is just a cop-out to say
technologically we can't make it happen. I think we can--if we
put our heads together, we can make it happen.
Mr. Shimkus. And, Congressman Frelinghuysen, can you talk
about in your bill H.R. 3100 the difference between the
intentionally interfere with or unintentionally interfere with?
Mr. Frelinghuysen. The caller ID service is available in
some places; in some places, it is not available.
Mr. Shimkus. So that was the intent of the language, just
the availability?
Mr. Frelinghuysen. Some parts of the country have this big
time, and others do not.
Mr. Salmon. That is one of the reasons that I have included
some other language in addition to the just you can't block
your caller ID. Why have we gotten to that point in our society
if you really don't want your privacy invaded you have to spend
money on a monthly basis to protect your privacy?
Mr. Tauzin. Would the gentleman yield?
Mr. Shimkus. I would.
Mr. Tauzin. Just to point out, too, we passed Federal laws
that gave us the right to call people and tell them not to call
us. But if we can't know who it is that is calling us so that
we can stop the calls when we want to, then it is a right
without a remedy, and we need to think about that. What we have
done is we have given the people a right they can't use.
I have also got another question that popped up in my mind
out of your questions. Mr. Shimkus, if you don't mind, let me
ask it.
Does either one of your bills cover political
solicitations? There is a new phenomena in political
campaigning of computer-generated calls where people's homes
are dialed, and if you are home then a real person gets on the
phone. If you are not, then a recorded message is left on your
machine asking you to vote for someone. And it is--often, it is
a little fraudulent. Very often, it is--the message is made to
sound like a real one, that this is the President of the United
States, and I am calling to you tell you I am on the ballot
tomorrow and sure appreciate--people say, the President called
me. You know, I got to go vote.
It is a little kind--there is a little kind of fraud
involved in the way those calls are generated. Either one
touches political solicitations?
Mr. Frelinghuysen. Evidently, it is exempt under the law.
Mr. Tauzin. First amendment problem, right?
Mr. Salmon. My bill doesn't change any of the existing
laws. You might want to talk to the FTC folks.
Mr. Tauzin. We will.
Mr. Shimkus. But the issue is all the stuff that we talked
about would be, except under your time constraints, would be
legal if they would just identify their phone number. Truth in
advertising.
Mr. Frelinghuysen. We want to know where they are calling
from, who they are. They know everything about us.
Mr. Shimkus. Thank you, Mr. Chairman. I yield back.
Mr. Tauzin. I thank the gentleman.
The Chair recognizes in her own time the gentlelady, Mrs.
Cubin, if she would like some.
Ms. Cubin. [Shaking head].
Mr. Tauzin. Thank the gentlelady.
The gentleman from Oklahoma, Mr. Largent, for a round of
questions.
Mr. Largent. Thank you, Mr. Chairman I have an opening
statement I would like to submit for the record.
Mr. Tauzin. Without objection, opening statements are part
of the record.
Matt and Rod, let me ask you a question, if you were to say
the principal problem that you are trying to address with each
of your pieces of legislation is the fact that the caller ID is
blocked or is it the calls themselves?
Mr. Salmon. I will answer that first.
My problem is just that there are a lot of people out there
that don't want to be bothered, and their requests ought to be
honored. So, in addition to knowing that who is calling, if
they request they are not called anymore, I would like to see
that they are not called.
The other issue again is that right now the hours that
telemarketers are prohibited by current statute from calling is
before 8 in the morning for obvious reasons and after 9 p.m. I
am trying to add to that the hours of 5 to 7. Steve, you know
as well I as I do with the busy schedules that we have, that
every family has, the only time that you ever really get a
chance to sit down and chat with your children or with your
family or with your spouse is during the dinner hour. And yet
you get--that is the time that they call because they know you
are there. So between the hours of 5 to 7 you get 45 different
telemarketers calls and you got indigestion after you are done.
So I am trying to add to the hours the hours of 5 to 7 just to
make it a little bit more user friendly.
Mr. Frelinghuysen. My response if I can give it to you as
well, our constituents or consumers should have a right to pick
up the call or not. And this bill, our bills are basically
saying people ought to identify who they are, then have you the
choice as to whether you want to pick up that call or not.
Mr. Largent. Is it your understanding, Rod, that these
telemarketers are intentionally blocking their caller ID.
Mr. Frelinghuysen. Absolutely. That is my gut feeling. I
think that is what the evidence shows.
Mr. Largent. That 100 percent of them are blocking.
Mr. Frelinghuysen. So I think what we are talking about,
there are some that are abiding by the rules, then there are
others out there just doing their own thing.
Mr. Largent. A 100 percent of the ones that are blocked,
they are doing it intentionally.
Mr. Salmon. Some of them really truly are technological
reasons. They have been using that I think really as a cop out.
I think as I addressed earlier, I think we can come up with
some technical solutions but to their defense part of the
problem is technical.
Mr. Tauzin. Would the gentleman yield? For example, the
call from your office to a constituent would show up as a
blocked caller ID. The reason is they are not identifiable to
your office right now. That could maybe get cured but in fact
if the gentleman would further yield we mention as a real
problem my mother and Matt's father purchased blocking devices
through their local telephone company to stop these calls from
coming in because the call from my office is unavailable. If I
call mom to find out, you know, who died there this week and at
home that I would like to keep up with those kind of things,
that with my constituents she has been my best eyes and ears on
the ground, she can't receive my call because it is
unintentionally blocked. So we have got both problems.
Mr. Largent. That is what your mother is telling you. She
may be----
Mr. Salmon. They actually changed their address.
Mr. Tauzin. It could well be. I don't know.
Mr. Largent. The reason I ask that question is it was my
understanding that some of these calls you can't identify them
because they are on T-1 lines or that sort of thing, and that
it is just maybe there are technological solutions that will
cost real dollars to fix and perhaps it would. I mean, I guess
I am thinking, you know, when I don't want to take any phone
calls I take my phone off the hook. It is a real easy solution.
I turn my cell phone off. You know I get more disgruntled
with--I mean I literally spend more time taking my junk mail
out of my mailbox into the trash can than answering
solicitations over the phone. I mean, I could get disability
for, you know, my back carrying all this junk that I get out of
my mailbox.
Mr. Tauzin. If you can make it through the NFL I know you
can carry a little junk mail.
Mr. Largent. Carrying the mail. But so I guess I'm just
trying to seek some balance here. I mean I can appreciate the
fact that, you know, I get those calls too. And when I get them
I say no, thanks, and I hang up and it is the end of the story
and it takes me 5 seconds. I keep going back to what Nathan
said. I wonder if this is something that really requires
Federal intervention here and perhaps we will hear that from
our next panel. So I appreciate you having this hearing because
we get constituent calls, I get those calls in my home as well.
So I look forward to hearing the next panel.
Mr. Tauzin. I thank the gentleman. The Chair now is pleased
to recognize the gentleman from Maryland, Mr. Ehrlich, for a
round of questions.
Mr. Ehrlich. Two real brief questions to you and maybe the
chairman, I will direct it to Matt and Rod and you, Chairman.
One question, Matt, you talked about whether the technology
exists. You characterize it a cop out. Do you know for a fact
that technology exists, to follow up to John's question, or is
that just your speculation?
Mr. Salmon. Yes, I know for a fact that technology exists.
It may be right now costly, but, yes, it exists. Absolutely.
Mr. Ehrlich. Intuitively----
Mr. Salmon. One example that I used before, yeah, the
telemarketers could actually go back to physically dialing on
individual phones instead of these automated systems. And yes,
they could comply. It might cost them some money to comply with
it, but they could comply.
Mr. Ehrlich. I do not know the answer to that in regard I
guess to the constitutional history of calling within
prohibited hours and expanding, which is what this bill does,
expanding it in the statutory prohibition, what has been the
commerce clause foundational challenge to this prohibition and
do you not think expanding it to dinner time, which I
understand is your purpose, would give rise clearly to a court
challenge? Are you familiar with I guess the Constitutional
history of case law?
Mr. Salmon. I just know that for the last several years we
have already had restrictions in place on the hours per the FTC
guidelines regulations. You cannot call before 8 in the
morning, you cannot call after 9 p.m. So the precedence already
exists for limiting the times that they can call. I can't speak
to whether or not there have been challenges.
Mr. Tauzin. Would the gentleman yield? That is the point. I
don't think there have been challenges.
Mr. Ehrlich. I guess we will hear from the expert
testimony.
Mr. Tauzin. But keep in mind that commercial free speech is
generally treated differently under the Constitution than
political free speech. So there is a little more latitude.
Mr. Ehrlich. Clearly you have a little more authority to do
that given the easier standard to meet. But when you now take
that extra yard and----
Mr. Tauzin. Would the gentleman yield again? I am not sure
it is clear. I think there could be a constitutional challenge
even in the commercial free speech area. We are going to get
some research done on it. But what I am saying is that it would
clearly pose a problem if you went to trying to regulate
political speech as well, which we are not doing in this bill.
Mr. Ehrlich. But even commercial speech in this context
could raise a problem. I yield back.
Mr. Tauzin. I thank the gentleman. Let me thank both of our
friends for their efforts. Let me tell you both as you complete
your session with our committee, we are not through with this
issue. You have raised some very intriguing concepts and some
very intriguing subjects for further debate. I would urge all
the members to read these two bills, think them through, get
with their staffs and maybe we will have another little session
with the committee where we can get some thoughts from all of
you as to how you might like to proceed and whether you want to
see these two bills somehow merged into a single concept that
makes some sense. But I have to agree with you I think you
touched a very hot button here that people across America are
going to obviously appreciate us paying a lot more attention to
than perhaps we have so for. I thank you both for raising the
level of interest in these subjects to our committee. Thank you
very much.
The Chair is now pleased to welcome the second panel,
beginning with Ms. Eileen Harrington, who is Assistant Director
of Marketing Practices for the FTC. And we are pleased to
welcome the honorable Jeff Hatch-Miller from the Arizona House
of Representative, who will give us some idea of what is
happening on the State level. Then Ms. Virginia Tierney, a
Member of the Board of Directors of the American Association of
Retired Persons, which has a big interest in this issue; and
Mr. Steven Brubaker, the Senior Vice President of Operations of
InfoCision Management Corporation, who will be speaking on
behalf of the American Telemarketers Association, one of the
organizations of the telemarketers in our country who try their
best as I can understand it to self regulate the business
practices of telemarketers. We are pleased to have you all
here.
We will begin with the FTC. Welcome again, Eileen, we are
always pleased to have you and we are always extraordinarily
educated by your testimony. We appreciate your testimony.
Remember all of your written statements are part of our record,
if you can use your 5 minutes to summarize for us the high
points of your testimony.
Ms. Harrington.
STATEMENTS OF EILEEN HARRINGTON, ASSISTANT DIRECTOR OF
MARKETING PRACTICES, FEDERAL TRADE COMMISSION; THE HONORABLE
JEFF HATCH-MILLER, ARIZONA HOUSE OF REPRESENTATIVES; VIRGINIA
TIERNEY, MEMBER OF BOARD OF DIRECTORS, AMERICAN ASSOCIATION OF
RETIRED PERSONS; AND STEVEN R. BRUBACHER, SENIOR VICE PRESIDENT
FOR OPERATIONS, INFOCISION MANAGEMENT CORPORATION, REPRESENTING
AMERICAN TELEMARKETERS ASSOCIATION
Ms. Harrington. Thank you. I want to begin by wishing you
happy birthday. I know it is not until tomorrow, but I wanted
to tell you.
Mr. Tauzin. You realize what you have done: I am going to
get all kind of calls between 5 and 7 p.m.
Ms. Harrington. I found turning 40 to be really traumatic
and I hope it is easier for you.
Mr. Tauzin. You are very sweet.
Ms. Harrington. I am pleased to be here again before the
committee to present the views of the Federal Trade Commission
on this issue, and I am going to comment a little bit I think
on some of the issues that were raised in the first round of
questioning as I summarize our views.
First of all, the Congress did a very good job of defining
telemarketing in the act that directed the FTC to issue its
telemarketing sales rule. That definition is tied to phone
calls that are part of a plan, program or campaign designed to
induce the sale of goods or services. And so questions, for
example, from Mrs. Cubin about calls from her husband the
physician would not be and from Mr. Sawyer and Mr. Green, those
would not be considered under the statutory definition to be
telemarketing because they are not part of a planned program or
campaign to induce the sale of goods or services.
The FTC right now is in the process of reviewing its
telemarketing sales rule. We review all of our trade regulation
rules every so often to see to it that the rules still make
sense, and that they are effective. And the Congress asked us
to review the telemarketing sales rule after 5 years and we are
in the process of doing that now and preparing a report back to
Congress as well as looking at the rule to see whether it needs
to be changed. We expect to have that report back to you by
late this year or early next year. The rule review will be
finished before that time.
In January, we held the first public workshop as part of
this rule review and it was focused exclusively on this issue
of do not call. We learned a fair amount at the workshop on
this issue. First of all, we took a look at our own complaint
data base and we see that while we have a lot of complaints
about telemarketing, almost all of them concern allegations of
fraud. Only about 1 in 10 of the complaints that we have
concern unwanted calls.
At the workshop we asked questions about whether there are
technological fixes on the horizon or applications that would
give consumers greater sovereignty to protect against unwanted
calls. We did hear about some technological applications that
are already extant. They aren't being used much but they are in
existence and would enable telemarketing companies to be able
to block calls to telephone numbers owned by consumers who have
said that they don't want to receive calls. We also heard that
the reason that caller ID frequently fails to identify the
caller has in the minds of some at least to do with technical
shortcomings on T-1 and trunk lines.
On the other hand, just yesterday folks on our staff
working on this visited Bell Atlantic and the Bell Atlantic
folks told them that that is not so. I think we have to do some
more investigation to find out what the truth is about why
calls aren't adequately revealed and displayed on caller ID. We
learned that many States, as you have heard this morning, have
adopted statewide opt-out lists for telemarketing. We also
learned that in some instances at least those State laws have
more exemptions in them than, you know, the holes in a piece of
Swiss cheese and so that the exemption really swallows the
rule.
For example, we heard from an Assistant Attorney General in
the State of Kentucky who told us that there are 20 some
exemptions to Kentucky's ``do not call'' law and that those
exemptions include calls from insurance companies, calls from
charities, and so forth. Now, as to these specific bills H.R.
3180 would require telemarketers to tell consumers that they
have the right to be placed on centralized ``do not call''
lists and to actually see to it that the consumer is enrolled.
As Mr. Salmon noted, the Commission generally favors the
underlying goal of this legislation. We favor the notion that
consumers should have greater choice. On the other hand, we
recognize that there are costs that are going to be imposed by
this kind of regime and we have some concern about that. We
know from the Direct Marketing Association, which right now
operates a voluntary mail phone preference service list, that
its costs in maintaining that has really skyrocketed and
certainly if this became a mandatory scheme the cost would
increase greatly.
And so the question is who pays those costs? And how are
they borne directly and indirectly? Our assumption is that if
telemarketing companies have to pay costs to have their lists
scrubbed against ``do not call'' lists, as they do now under
many State laws, there would be costs passed on indirectly to
consumers. So the question is who has to bear the cost and are
consumers who want greater privacy willing to bear those costs.
That is a hard question.
I can also say that under our current ``do not call''
regime, consumers have the right to tell specific individual
telemarketing companies not to call them again. I think it is
very difficult for consumers to know whether their wishes are
being respected because it is a company-by-company deal. So you
almost have to keep a record by your phone about who
specifically you asked to not call and when you told them not
to call, and so on and so forth. A general opt-out provision
would give consumers a more meaningful way to know whether
their wishes are being respected. But it would come with costs.
I would also observe that under the current regime there
are exemptions from the FTC's jurisdiction, and in my
experience as a consumer it is the parties who are exempt who
keep calling me. I generally tell any telemarketers to put me
on the ``do not call'' list because that is my preference. I
can tell you that the calls I receive at my home generally are
from financial institutions that aren't subject to our
jurisdiction, phone common carriers that aren't subject to our
jurisdiction and nonprofits that aren't subject to our
jurisdiction.
We have raised to the committee before on other Internet e-
commerce related issues concerns about these ongoing
limitations in the FTC's fundamental jurisdiction, particularly
with regard to common carriers. I think that it just doesn't
make sense that a common carrier doesn't have to comply or
arguably doesn't have to comply with fundamental consumer
protections because some time ago the Federal Trade Commission
Act was written to exclude common carriers at a time when
common carrier had some real meaning in the telecommunications
area. I think that with convergence and the growth of e-
commerce, Mr. Chairman, you have it just right that
telemarketing is e-commerce, and the question is whether some
telemarketers have to play by the rules and others don't.
On the issue of blocking identity of callers that is raised
in H.R. 3100, we certainly would favor greater information to
consumers, not less. We also favor the scheme that gives
consumers a private right of action but would caution that if
consumers can't tell who is calling them, a private right of
action doesn't do them a whole lot of good. That would conclude
my remarks, and I'd be happy to answer any questions.
[The prepared statement of Eileen Harrington follows:]
Prepared Statement of Eileen Harrington, Assistant Director of
Marketing Practices, Federal Trade Commission
Mr. Chairman, I am Eileen Harrington of the Federal Trade
Commission's Bureau of Consumer Protection. The Federal Trade
Commission is pleased to provide testimony today on two bills now under
consideration, the ``Telemarketing Victims Protection Act'' (HR 3180)
and the ``Know Your Caller Act'' (HR 3100).1 Both of these
bills address consumer protection issues relating to telemarketing, a
longstanding focus of Commission concern both in the law enforcement
and the regulatory arena.
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\1\ The views expressed in this statement represent the views of
the Commission. My responses to any questions you may have are my own
and do not necessarily reflect the views of the Commission or of any
individual Commissioner.
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the commission's authority
As the federal government's principal consumer protection agency,
the FTC's mission is to promote the efficient functioning of the
marketplace by taking action against unfair or deceptive acts or
practices, and increasing consumer choice by promoting vigorous
competition. To fulfill this mission, the Commission enforces the
Federal Trade Commission Act (``FTC Act''), which prohibits unfair
methods of competition and unfair or deceptive acts or practices in or
affecting commerce.2 There are two primary modes open to the
Commission to enforce the prohibition against unfair or deceptive acts
or practices. The Commission may pursue such acts or practices through
administrative litigation that may ultimately result in the issuance of
a cease and desist order. In addition, Section 13(b) of the FTC Act, 15
U.S.C. Sec. 53(b), empowers the Commission to file law enforcement
actions in federal district courts to obtain preliminary and permanent
injunctive relief, restitution for injured consumers, and, where
restitution is not practicable, disgorgement of ill-gotten gains from
fraud operators.
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\2\ 15 U.S.C. Sec. 45(a). The Commission also has responsibilities
under 45 additional statutes, e.g., the Fair Credit Reporting Act, 15
U.S.C. Sec. 1681 et seq., which establishes important privacy
protections for consumers' sensitive financial information; the Truth
in Lending Act, 15 U.S.C. Sec. Sec. 1601 et seq., which mandates
disclosures of credit terms; and the Fair Credit Billing Act, 15 U.S.C.
Sec. Sec. 1666 et. seq., which provides for the correction of billing
errors on credit accounts. The Commission also enforces approximately
30 rules governing specific industries and practices, e.g., the Used
Car Rule, 16 C.F.R. Part 455, which requires used car dealers to
disclose warranty terms via a window sticker; the Franchise Rule, 16
C.F.R. Part 436, which requires the provision of information to
prospective franchisees; and the Telemarketing Sales Rule, 16 C.F.R.
Part 310, which defines and prohibits deceptive telemarketing practices
and other abusive telemarketing practices.
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the commission's efforts against fraudulent and deceptive telemarketing
Using its authority under Section 13(b) and Section 5 of the FTC
Act, the Commission has filed hundreds of law enforcement actions
against fraudulent and deceptive telemarketers in the past 15 years. To
assist the Commission in its vigorous efforts to combat fraudulent
telemarketing, Congress, in 1994, added to the range of weapons
available to the Commission in this law enforcement work by enacting
the Telemarketing and Consumer Fraud and Abuse Prevention Act
3 (``the Telemarketing Act'' or ``the Act''). The Act
directed the Commission to promulgate a Trade Regulation Rule
prohibiting ``deceptive telemarketing acts or practices and other
abusive telemarketing acts or practices.'' 4 The
Telemarketing Act also reached beyond hard-core fraud and deception,
directing the Commission to include in the rule provisions designed to
bolster consumers' right to privacy in their own homes, and their
sovereignty over the issue of whether to receive telemarketing calls.
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\3\ 15 U.S.C. Sec. Sec. 6101-08.
\4\ 15 U.S.C. Sec. 6102(a)(1).
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Specifically, the Telemarketing Act mandated that the rule include
prohibitions against any pattern of unsolicited telemarketing calls
``which the reasonable consumer would consider coercive or abusive of
such consumer's right to privacy,'' 5 and restrictions on
the hours of the day and night when unsolicited telephone calls can be
made to consumers.6 Accordingly, the Commission adopted the
Telemarketing Sales Rule (``TSR'') on August 16, 1995, which, inter
alia, defined and prohibited certain deceptive telemarketing practices,
7 prohibited calls by any telemarketer or seller to any
consumer that had previously stated the wish not receive such calls
from that telemarketer or seller, 8 and prohibited calls to
consumers before 8:00 AM or after 9:00 PM, local time for the consumer.
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\5\ 15 U.S.C. Sec. 6102(a)(3)(A).
\6\ 16 U.S.C. Sec. 6102(a)(3)(B).
\7\ 16 C.F.R. Sec. 310.3.
\8\ 16 C.F.R. Sec. 310.4(b)(1)(ii).
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The Telemarketing Act enhanced the Commission's law enforcement
tools by enabling the Commission to seek civil penalties of $11,000 for
each violation of the Rule, in addition to the equitable relief already
available to the Commission under Sections 5 and 13(b).9 As
discussed in greater detail below, the two bills currently under
consideration would build further on the consumer protections adopted
by the Commission under the Telemarketing Act. In this regard, it is
important to note that the Commission is also in process of reviewing
whether the TSR could be strengthened to provide greater consumer
protection, consistent with avoiding any undue compliance burden on
legitimate telemarketers, as part of a broad regulatory review of the
TSR.10 As the opening action of this process, the Commission
held a workshop conference on January 11, 2000, that focused on ``do-
not-call'' issues. The regulatory review of the TSR will evaluate the
costs and benefits of the Rule and its overall regulatory and economic
impact since its adoption in 1995. Based on the information received
during this rule review, the Commission will determine whether to
recommend modifications to the Rule or to retain the Rule unchanged.
The Commission will report its findings to Congress at the conclusion
of this evaluation of the Rule's operation.
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\9\ While the FTC is empowered by Section 16(a) of the FTC Act, 15
U.S.C. Sec. 56(a), to file its actions for injunctive relief,
restitution, disgorgement and other equitable relief through its own
attorneys, FTC actions for civil penalties are referred to the
Department of Justice for filing.
\10\ The Telemarketing Act requires that five years following the
promulgation of the TSR, the Commission review the implementation of
the Act and its effect on fraudulent telemarketing and report the
results of the review to Congress. 15 U.S.C. Sec. 6108. On February 28,
2000, the Commission published a notice in the Federal Register
soliciting comments on the TSR. 65 Fed. Reg. 10,428.
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The Commission generally favors the underlying goal of the bills
under consideration, which is to support consumer choice in the matter
of whether to receive telemarketing calls. The Commission's views, set
forth below, on each of the various requirements of the bills are
informed by oral and written comments supplied to the Commission at the
workshop and in the regulatory review comments received to date, as
well as the Commission's long law enforcement experience in the area of
telemarketing.
the ``telemarketing victims protection act'' (hr 3180)
HR 3180 would amend the Telemarketing Act to mandate that the
Commission include in the TSR the following: 11 (1) a
requirement that telemarketers notify any consumer whom they call that
the consumer has the right to be placed on the ``do-not-call'' list
maintained either by the Direct Marketing Association (``DMA'') or by
the consumer's state; (2) a requirement that, if the consumer elects to
be placed on a ``do-not-call'' list, the telemarketer notify the DMA or
the appropriate state, as the case may be, within a reasonable time;
(3) a requirement that telemarketers obtain and reconcile, on a regular
basis, the ``do-not-call'' lists maintained by the DMA and the states
with the telemarketers' lists of prospective purchasers; (4) a
prohibition against telemarketing calls between 5:00 p.m. and 7:00
p.m.; and (5) a prohibition against telemarketers evading consumers'
``caller-ID'' devices. Like the existing provisions of the TSR, all of
these additional rule provisions would be enforceable by both the FTC
and the state attorneys general in federal court actions.12
The bill would also mandate a study by the Commission within one year
covering violations of the Telemarketing Act, ``especially of repeated
violations by a single telemarketer.''
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\11\ HR 3180 would not expand the scope of the TSR, which, pursuant
to the Telemarketing Act, is limited to activities within the
jurisdiction of the FTC as delimited by the FTC Act. 15 U.S.C.
Sec. 6105(a). The FTC Act limits the FTC's jurisdiction to entities
which are ``organized to carry on business for [their] own profit or
that of [their] members,'' 15 U.S.C. Sec. 44, and also expressly
excludes the activities of several specific types of entities from
coverage under that Act. The exclusions are: ``banks, savings and loan
institutions described in section 57a(f)(3) of this title, Federal
credit unions described in section 57a(f)(4) of this title, common
carriers subject to the Acts to regulate commerce, air carriers and
foreign air carriers subject to part A of subtitle VII of title 49, and
persons, partnerships, or corporations insofar as they are subject to
the Packers and Stockyards Act, 1921, as amended (7 U.S.C. Sec. 181 et
seq.), except as provided in section 406(b) of said Act (7 U.S.C.
Sec. 227(b)).'' 15 U.S.C. Sec. 45(a)(2). Also, the McCarran-Ferguson
Act generally exempts the ``business of insurance'' from the FTC Act.
15 U.S.C. Sec. 1012(b).
\12\ The FTC, through the Department of Justice, could file actions
seeking civil penalties of $11,000 per violation, as well as injunctive
relief. States are empowered only to recover restitution for their
citizens, and to obtain injunctive relief. 15 U.S.C. Sec. 6103(a).
There is also a private right of action with a jurisdictional threshold
of $50,000.
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the ``know your caller act'' (hr 3100)
HR 3100 would amend the Telephone Consumer Protection Act
13 (``TCPA'') by adding a provision that declares it
unlawful for any person making ``any telephone solicitation to
interfere with or circumvent the ability of a caller identification
service to access or provide to the recipient of the call'' information
to be specified in regulations that the bill directs the Federal
Communications Commission (``FCC'') to adopt within six months of
enactment. HR 3100 further directs that the mandated FCC regulations
must require that telephone solicitations be made in such a manner that
the consumer on the receiving end who has a caller identification
service will be provided with a name and number the consumer can use to
assert his or her ``do-not-call'' rights. In addition, HR 3100 directs
that the mandated FCC regulations must prohibit any telephone solicitor
to whom a consumer directs a ``do-not-call'' request from using that
consumer's name and telephone number ``for any other telemarketing,
mail marketing or other marketing purpose (including transfer or sale
to any other entity for marketing use)'' other than to effectuate the
``do-not-call'' request. The FCC would have responsibility for
enforcement, but HR 3100 also would expand the TCPA's private right of
action for failure to honor a ``do-not-call'' request, so that a
consumer could also sue in state court to enjoin violation of the
``Know Your Caller'' provisions or regulations promulgated under them,
and to recover actual damages or $500 for such violation. States'
attorneys general could also bring such actions in federal
court.14 At the court's discretion, these damages could be
tripled for willful or knowing violation. Finally, HR 3100 provides
that there will be no preemption of state law that imposes more
restrictive intrastate requirements or regulations on, or which
prohibits interfering with or circumventing, caller identification
services.
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\13\ Codified at 47 U.S.C. Sec. 227.
\14\ 47 U.S.C. Sec. 227(f).
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Requirements That Telemarketers Notify Any Consumer Whom They Call That
the Consumer Has the Right to Be Placed on a ``Do-Not-Call''
List, and That Telemarketers Notify the DMA or the Appropriate
State of the Consumer's Desire to Be Placed on Such a List.
The ``do-not-call'' notification requirement in HR 3180 likely
would benefit consumers. Some consumers object to receiving
telemarketing calls because they view such calls as an intrusion on
their privacy and a burden on their time. ``Do-not-call'' requirements
give consumers the right to avoid receiving telemarketing calls.
Consumers, however, need to be aware of this right if they are to make
use of it. HR3180's ``do-not-call'' notification requirement likely
would increase consumer awareness of the right not to be called,
thereby assisting them in their exercise of this right.
The ``do-not-call'' notification requirement, however, also likely
would impose costs on telemarketers. Telemarketing is likely to be less
effective if consumers are promptly 15 notified of their
opt-out right. The ``do-not-call'' notification requirement also would
charge telemarketers with the responsibility for communicating
consumers' wishes to a centralized ``do-not-call'' list. While a
telemarketer itself may fairly be required to comply with a consumer's
stated desire not to be called again, it may be an undue burden to
require the telemarketer to communicate to a third party the consumer's
preferences as to other telemarketers.
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\15\ Like other disclosures mandated under the TSR, see 16 C.F.R.
Sec. 310.4(d), the ``do-not-call'' notification presumably would be
required to be made ``promptly and in a clear and conspicuous manner.''
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Assuming that the ``do-not-call'' notification requirement is
imposed, HR 3180 as drafted does not address the fact that many states
administering ``do-not-call'' lists require payment of a fee by
consumers who wish to be included on the list. Thus, it is not clear
how such a fee, where applicable, would be paid or by whom. As an
alternative, HR 3180 could require only that telemarketers inform
consumers of the existence of ``do-not-call'' options or that they
inform them of the existence of the options and provide the information
about how consumers may directly contact the appropriate association or
state regulatory body.
Even beyond the issue of fees, the Commission might be concerned
about whether this approach would impose an undue burden on DMA, the
industry association that developed its own ``do-not-call'' list and
makes adherence to it a condition of membership.16 During
the Commission's recent workshop conference on TSR ``do-not-call''
issues, DMA representatives noted that the cost of maintaining the list
was high and growing.17 Requiring that all telemarketers--
even non-DMA members--specifically tell consumers about the DMA's ``do-
not-call'' list may result in substantially increased consumer use of
that service. Legislation should encourage self-regulatory initiatives
like DMA's ``do-not-call'' list, but not impose additional burdens on
them.
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\16\ The ``do-not-call'' list maintained by the DMA for its members
is currently offered as a free service to consumers.
\17\ DNC Tr. 98:4-99:12 (statement of Bob Sherman for the DMA,
noting that their list is ``getting out of control cost-wise.''). Note:
copies of the transcript pages cited in this letter are attached to
this statement; the entire transcript may be accessed at the FTC's Web
site at www.ftc.gov/bcp/rulemaking/tsr/dncforum/index.html.
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The Requirement That Telemarketers Obtain and Reconcile the ``Do-Not-
Call'' Lists Maintained by the DMA and the States with the
Telemarketers' Call Lists.
The DMA requires that its members obtain and reconcile the DMA
``do-not-call'' list with their call lists. HR 3180 would add the force
of law to that private requirement, and would enlarge it to encompass
non-members of DMA. Currently, non-members of DMA can purchase the list
to avoid making calls to consumers who have expressed a desire not to
be called by telemarketers. HR 3180 requires telemarketers to offer
consumers the opportunity to be placed on either DMA's ``do-not-call''
list or an appropriate state list. Since inclusion on DMA's list is
free for consumers and inclusion on a state list may require payment of
a fee, it is likely that DMA's list would effectively become a
centralized, national ``do-not-call'' list. Since a number of states
already administer their own ``do-not-call'' system, this requirement
raises issues of federalism. Consideration should be given to including
in HR 3180 language that makes explicit whether and to what extent
Congress intends the proposed federal scheme to preempt existing state
schemes.18
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\18\ Industry representatives and others at the workshop conference
on TSR ``do-not-call'' issues strenuously argued in favor of ensuring
that if a national ``do-not-call'' list were to take effect, it preempt
existing state lists. See DNC Tr. 185:5-197:4.
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The Prohibition Against Telemarketing Calls Between 5:00 p.m. and 7:00
p.m.
If enacted, HR 3180 would prohibit telemarketing calls from 5:00
p.m. to 7:00 p.m. This would benefit consumers who do not want to be
called by telemarketers during the dinner hour. On the other hand, it
may be more difficult for telemarketers to sell their goods and
services if they are prevented from making calls during this particular
two-hour period, a time when many consumers are likely to be at home.
As noted above, pursuant to the mandate of the Telemarketing Act to
include ``restrictions on the hours of the day and night when
unsolicited telephone calls can be made to consumers,'' 19
the Commission specified in the TSR that such calls may be made only
``between 8:00 a.m. and 9:00 p.m. local time at the called person's
location.'' 20 The Commission specified these times in order
to achieve consistency with existing similar restrictions included in
regulations enforced by the Federal Communications Commission under the
Telephone Consumer Protection Act of 1991.21
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\19\ 15 U.S.C. Sec. 6102(3)(B).
\20\ 16 C.F.R. Sec. 310.4(c).
\21\ 47 U.S.C. Sec. 62.1200 et seq.; 47 C.F.R. Sec. 1200(e).
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At the Commission workshop focusing on the ``do-not-call''
provision of the Rule, some participants suggested technological
solutions which currently exist or may soon be available to give
consumers the ability to accept and reject telemarketing calls
selectively based on their individual schedules. It is important,
however, to bear in mind the cost to consumers of technological
solutions. A consistent thread in comments by consumers received thus
far in the rule review suggests that consumers resent having to pay for
the privilege of being free from telemarketing calls. In the ensuing
stages of the TSR regulatory review, the staff of the Commission will
be soliciting and reviewing information about possible technological
solutions to give consumers sovereignty vis-a-vis telemarketers,
including technologies that would enable consumers to determine the
times they are willing to receive telemarketing calls.
Provisions Addressing the Evasion of Consumers' ``Caller-ID'' Devices
by Telemarketers.
Both bills contain provisions designed to empower consumers to use
their ``caller-ID'' equipment to screen unwanted telemarketing calls.
The language in HR3180 as drafted would prohibit telemarketers, through
FTC regulation (including the threat of civil penalties), from actively
blocking identifying information, but the proposal may not reach the
widespread technological problem that results in what might be termed
``passive blocking.'' According to representatives from telemarketers
and common carriers, telemarketers generally do not actively ``block''
their identifying information; rather, such information is not
transmitted because of the types of phone lines used by most
telemarketers.22
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\22\ DNC Tr. at 113:10-114:1 (comments of Annette Kleckner, a
representative of MCI WorldCom, noting that telemarketing calls go out
over T-1 or trunk lines and not through a local switch that would pick
up a specific telephone number that could be transmitted to ``caller-
ID'' equipment).
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By contrast, HR 3100 takes a two-fold approach to accomplishing
similar goals.23 It prohibits any affirmative interference
or circumvention of consumers' ``caller-ID'' service, and at the same
time requires, via FCC regulation, that telephone solicitations
transmit through ``caller-ID'' services the name of their company or
the entity on behalf of whom they are soliciting and a valid working
phone number at which the caller may be reached during business hours.
The FCC would have enforcement responsibility, but HR 3100 would also
be enforceable through a private right of action, and through actions
by state attorneys general in federal court.24
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\23\ Because HR 3100 amends the TCPA rather than the Telemarketing
Act, it does not incorporate the jurisdictional limitations written
into the FTC Act, and included by reference in the Telemarketing Act
(described, supra, at note 11).
\24\ As a practical matter, it would likely be difficult for
consumers to bring a private right of action for violation of the
``Know Your Caller'' requirements, since such violation would deprive
the consumer of a piece of information essential to bringing an action,
namely, the identity and location of the potential defendant. Moreover,
the consumer experiencing violation of these requirements would not
have a realistic alternative for discovering this information.
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The approach taken in HR 3100 to require disclosure of identifying
information has the added benefit of helping to remedy the situation
where consumers answer calls only to find no one on the other end of
the line. Telemarketing calls give rise to this occurrence because
telemarketers use ``predictive dialers.'' These systems--designed to
maximize the time each telemarketing representative spends selling--
simultaneously dial many more phone numbers than could be handled by
available telemarketing representatives. If a consumer answers a call
when there is no sales representative to handle it, the call is
automatically disconnected or abandoned. Consumers who answer calls
that are disconnected or abandoned by predictive dialers do so only to
find no one at the other end. When a telemarketer hangs up without
identifying himself or herself, consumers have no way to exercise their
right to request to be placed on a ``do-not-call'' list unless the
``caller-ID'' system shows a number where the telemarketer or seller
can be reached. The Commission therefore favors the approach taken in
HR 3100, specifying that the phone number displayed be one that is
useful to a consumer who wishes to call back and request that he or she
be placed on the company's ``do-not-call'' list.
At the Commission's January 2000 workshop conference on TSR ``do-
not-call'' issues, participants expressed disparate views on whether it
is technologically possible for consumers' ``caller-ID'' equipment to
display a telemarketer's name and phone number when the telemarketer is
calling via a trunk line and, if so, at what cost.25 As part
of its rule review, the Commission has requested information on the
feasibility and cost of transmitting this information. Based on the
debate reflected in the TSR review proceeding to date, it may be that
broader protection could be achieved through a requirement to disclose
certain identifying information, as in HR 3100, rather than just a
prohibition against blocking.26
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\25\ See generally, DNC Tr. 109:8-121:25.
\26\ HR 3100 may raise other issues that would more appropriately
be addressed by the FCC, the designated enforcement agency under that
bill.
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The Provision That Within One Year the Commission Conduct a Study of
Violations of the Telemarketing and Consumer Fraud and Abuse
Prevention Act, ``Especially of Repeated Violations By a Single
Telemarketer.''
If the HR 3180 requirement for a study of the violations of the
Telemarketing Act, as amended by HR 3180, is enacted, such a study
would be based largely on the complaint data from the Commission's
ongoing TSR enforcement effort. A central component of this effort is
``Consumer Sentinel,'' the FTC's confidential database shared by law
enforcement officials throughout the United States and Canada. Numerous
organizations contribute complaint data to Consumer Sentinel, including
the Federal Trade Commission, the National Fraud Information Center,
the Better Business Bureaus, Canada's Phone Busters, and other federal
and state sources. The Commission uses the database to assess the
extent of law violations, to spot emerging trends, and to target its
enforcement efforts on the most serious problems. Through Consumer
Sentinel the Commission would be able to track trends in violations of
the new law in the first year, but a study after the new law has been
in effect for a longer time would likely be more informative, as it may
take some time for trends to emerge and for consumer awareness of their
rights to grow.
In conjunction with the regulatory review of the TSR, the
Commission has undertaken a study of the life cycle of telemarketing
generally: the historical nature of telemarketing, its current status,
emerging trends, and how the industry is changing to meet the future.
The goal of this study is to document the historical trends that have
shaped the practice of telemarketing, and to document factors likely to
shape its future, including technological innovations, shifting
markets, consumer attitudes about choice, regulatory and law
enforcement efforts at the state and federal levels, and telemarketers'
self-regulatory efforts. The results of this study will help
legislators, regulators, and law enforcement to better understand
telemarketing and to anticipate and respond more effectively to changes
on the horizon.
In conclusion, the Commission appreciates the efforts of the
sponsors of HR 3100 and HR 3180 to protect the consumers' ability to
chose whether to receive telemarketing calls, and to know the identify
of callers so that they can decide whether to accept such calls. The
Commission also is appreciative of the opportunity the Subcommittee has
provided to present testimony today on theses legislative proposals,
and I would be pleased to answer any questions.
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Mr. Tauzin. Thank you very much Ms. Harrington.
Mr. Hatch-Miller, from the State of Arizona, welcome. It is
Representative?
Mr. Hatch-Miller. Yes, it is.
Mr. Tauzin. Give us a picture of what is happening in the
home field.
STATEMENT OF HON. JEFF HATCH-MILLER
Mr. Hatch-Miller. I would be glad to. Thank you for
inviting me here today and also your efforts on behalf of
citizens in our State and across the country. When I first
started thinking about coming to talk to you, I was thinking of
the Fuller Brush salesmen from 1906, when they first started
going door to door. In those days it was pretty easy. You
didn't want solicitors, you just painted a little sign and hung
it on your door and most of the solicitors would stay away.
Mr. Tauzin. Or you got a dog.
Mr. Hatch-Miller. Or you got a dog. Things are certainly a
lot more complex nowadays in this world of telecommunications.
Putting up a no solicitor sign is actually a process where you
have to put one up for every solicitor that comes calling. And
then along with predictive dialing and answering machine
detection and sophisticated sales techniques, the telemarketers
have some powerful arsenal at their disposal.
Telemarketers I think intimidate a lot of people, and some
people still feel that it is impolite to hang up. And quite
frankly telemarketers are practiced in how to turn a no into a
yes. So they are sophisticated. They intimidate many people.
Some people feel that it is reasonable for them to want to say
that I don't want to receive a phone call but they don't know
how. And I am not talking about fraudulent schemes here. Even
in legitimate cases the target is sometimes convinced to buy
products that they don't want or don't need or can't use and
often can't afford. And some citizens are simply not
emotionally or intellectually able to ward off repeated calls.
Senior citizens are often targeted relentlessly and some report
getting more than 20 calls a day.
The Arizona departments that I talked to frequently get
these telemarketing complaints from citizens, and one gentleman
called up, he was furious that he had to pay the telephone
company for caller ID and pay them again when the caller ID was
blocked from finding out who had called him and find out he had
to pay even more to get it listed in the phone book as somebody
that didn't want to be called. A woman called us and she was
very thankful that the voice calls eventually stopped after a
while, but then she started receiving fax calls in the middle
of the night.
These nuisance calls are bad enough, but even worse are the
ones that are schemes. And in Arizona we do get a lot of
fraudulent scheme type calls, especially to our elderly
citizens. I learned of victims who were persuaded to mortgage
their home to claim a nonexistent sweepstakes prize or make a
money losing investment.
It is difficult to tell the honest from the dishonest
salesperson. You certainly can't do it by their telephone
number or the sound of their voice. So in Arizona the Secretary
of State and the Attorney General have focused their attention
on this problem for several years and we have passed as a State
legislature a number of bills on this subject. And we were
forced to update our laws in 1999 because what we discovered
was that even though we had regulations supposedly in place,
out of the hundreds of telemarketing operations that existed,
only four companies were registered in the State and two of
those four didn't have to comply with our regulations because
they were exempted. Everyone else fell through the cracks.
Our purpose in revising statutes and having the regulations
in Arizona is very simple. We want to develop a registry of
those companies engaged in telemarketing so that we can ban--
and then we also ban intrusive practices. You can imagine the
debate was pretty heated and that the arguments for free
commerce were pretty strong. And I am certainly a proponent of
free commerce. But society's need to define and require
appropriate business practices prevailed in our discussions.
In Arizona now we require that basic information be filed
by a company that wants to conduct telemarketing. And there are
two levels of that. We had a lot of loopholes, as mentioned
over here. We had 17 loopholes in our State. We closed 11 of
them. And we asked for those 11 who were previously exempted to
provide limited information, just the name of their company and
a basic contact person and phone number. They can register
their information online, they can do it, there is no fee,
there is no bond and they are not required to provide annual
reports, just an update if things change.
Our largest telemarketers of course are fully registered
and we do have a fee for them and a bond and an annual report.
And we even ask that those that say they are exempt from our
process file a report, at least giving us their name and
telling us why they think they are exempted.
In addition to regulation or registration, bans have been
placed on caller ID blocking, prerecorded messages and similar
kinds of technology. And complementing H.R. 3180, companies in
Arizona must maintain ``do not call'' lists. Unfortunately at
present we do not have a State call list in place. And we do
hope to establish that in the next year or 2. And there are
really a lot of numbers in our state, hospitals, nursing homes,
emergency facilities, there are numbers that shouldn't be
called and we know them and it would be fairly easy to put
those on a list. And also we have people that call the
Secretary of State's Office and Attorney General'S Office and
say we don't want to receive any phone calls anymore. So it
would be fairly easy to put those names again on that list.
So even though citizens ask us to put them on a ``do not
call'' list, right now citizens have to deal with each company
separately, in effect being forced to put up a ``no
solicitors'' sign for every salesperson that comes calling.
We also have another serious limitation. First of all, the
language is fairly narrowly crafted. It only applies to
sellers. So if you are calling to set an appointment for later
sale, it doesn't apply to you. If you are calling to set up an
investment relationship, it doesn't apply to you. There are a
lot of companies for the purpose of our law they remain
unregulated because of that sales definition in particular. And
then there are also ways to circumvent the law. One way is that
our law says that you have to have permission in order to use a
prerecorded message. So you have to have prior permission. So
we have people calling up saying will you hold for a very
important message. It is a live person that asks you that, then
the recorded message starts.
Another continuing difficulty is establishing the fact that
a citizen actually did say do not call me. Sometimes the
numbers change, the names of the companies change even though
it is the same marketer, and how do you prove that I said I
don't want that call. And then of course we don't regulate
faxes or e-mail and those can be just as problematic. Some
agencies have also expressed the concern that at least in
Arizona the penalties for noncompliance and violations are too
low. So we have a difficulty there.
We have advertised our changes around the State. We get
lots of people calling every time we do, telling us they want
these regulations. They say thank you for controlling
telemarketing, now do more. And what I am hoping that you will
do is do more by amending the Telemarketing Consumer Fraud and
Abuse Prevention Act and provide our citizens with additional
protections. A national ``do not call'' data base linked to
State data bases makes sense to me for both businesses and
citizens. Requiring notification that these data bases exist
give citizens added power to decide whether or not they do want
to be called. And I thank you, Mr. Chairman.
[The prepared statement of Hon. Jeff Hatch-Miller follows:]
Prepared Statement of Hon. Jeff Hatch-Miller, Member, Arizona House of
Representatives
Mr. Chairman and members of the committee.
My name is Jeff Hatch-Miller, a resident of Arizona and a member of
the state House of Representatives. I thank you for this opportunity to
discuss telemarketing laws. Your efforts to solve problems related to
undesired telemarketing practices are greatly appreciated.
In 1906, when the first Fuller Brush salesmen began going door to
door, I'm certain that many residents were irritated at being disturbed
by the unwanted intrusion. Those that were bothered could easily print
``No Solicitors'' on a small sign and post it on their door. The honest
and considerate salesman stayed away.
In today's world of telecommunications, putting up a ``No
Solicitor's'' sign is not nearly that simple. With predictive dialing,
answering machine detection, high pressure sales tactics and other
modern techniques, the phone solicitor has a powerful arsenal.
They intimate many people. Some people still feel that it's
impolite to hang up. Telemarketers have practiced how to take control
of a conversation, learned how to turn that ``no'' into a ``yes.''
I'm not necessarily talking about fraudulent schemes. Even in
``legitimate'' cases the target is convinced to buy products they don't
want, don't need, can't use, and often can't afford.
Some citizens are simply not emotionally or intellectually able to
ward off repeated calls. Senior citizens are often targeted
relentlessly, some getting more than 20 calls a day.
Staff officials frequently receive telemarketing complaints from
distressed citizens. One gentleman was furious that he had to pay the
telephone company for Caller ID, and then pay more to find out who it
was when the call information was blocked. He was doubly upset to learn
he had to actually pay the phone company to be listed in the phone book
as someone who did not want to receive telemarketing calls. A woman
called us, thankful that voice calls did eventually stop, but now
wanting to know how to stop the fax calls that came all night long.
These ``nuisance'' calls are bad enough. Even worse are those
telemarketing schemes that are truly fraudulent. I've learned of
victims that were persuaded to mortgage their homes in order to claim
non-existent sweepstakes winnings or make money-loosing investments.
It's difficult to tell the honest from the dishonest salesperson--
certainly one cannot from the phone number used nor from the sound of
the salesperson's voice.
In Arizona the Secretary of State and Attorney General have focused
attention on this problem for several years amid growing concerns
raised by both consumers and businesses. The state legislature passed
several bill on the subject. We were forced to update our laws again in
1999 after learning that even though regulations were supposedly in
place, only four companies were actually registered in Arizona as
telemarketers, and two of these four were exempted from our
regulations. Everyone else simply fell through the cracks.
Our purpose in revising the statutes was simple. Develop a registry
of those companies engaged in telemarketing in Arizona and ban
intrusive and inappropriate practices. Debate was heated. Arguments for
free commerce were strong. But society's need to define and require
appropriate business practices prevailed.
In Arizona we now require that basic information be filed about who
was calling our citizens, from where, and for what purpose--so when
problems arise we know whom to contact.
We closed gaping loopholes in prior legislation. Of the 17 types of
telemarketers exempted previously, 11 now must provide our Secretary of
State with ``limited'' information. These solicitors can register
online, without a fee or bond, must provide only basic information
about themselves, and are not required to file an annual report.
Our largest telemarketers are required to complete full
registration including payment of an application fee, posting of a
bond, and an annual report of activities. Even those that believe they
are exempt must now register their exemption, letting us know who they
are and why they believe they are exempt.
In addition to registration, bans were placed on Caller ID
blocking, prerecorded messages, and similar technologies.
And, complimenting H.R. 3180, companies in Arizona must maintain
``do-not-call'' lists. Unfortunately, at present we have no provision
for a statewide list. I hope to establish such a list next session.
There are numbers for hospitals, nursing homes, emergencies and other
locations that no telemarketer should call--but we don't keep track of
them on a central database. Many citizens ask us to put them on a
general ``do-not-call'' but as of now they must deal with each company
separately--in effect being forced to put up a new ``no solicitor''
sign for every salesperson who comes calling.
A serious limitation to Arizona's new statutes is that the language
is very narrowly crafted. The rules only apply to ``sellers'' and many
telemarketers are not technically sellers. Some offer ``informational
programs'' about time shares, others are brokerage firms wanting to
establish an investment relationship, and others are telecom companies
offering their services. The description of unlawful practices only
applies to sellers--so these companies, for the purposes of these laws,
remain unregulated.
There are also ways to circumvent the specific restrictions in the
law. For example, we say that a telemarketer cannot use a pre-recorded
message without prior consent. So, some companies will have a live
person ask ``will you please hold for a very important message . . .''
Once the citizen says ``yes,'' they have technically given their
permission.
One continuing difficulty is establishing in fact that the citizen
really did say ``do not call.'' Another is that the regulations don't
apply to faxes or e-mail, which can be just as intrusive and difficult
to stop when undesired.
Some agencies have expressed concern that the penalties for non-
compliance and violations are too low and that enforcement is made more
difficult as a result.
We've advertised these changes broadly. Whenever a staff member
addresses a public meeting the topic of telemarketing generates a great
deal of interest. Invariably telemarketing complaints increase
immediately afterwards.Since passing our revised laws, state offices
have received hundreds of calls saying ``Thank you for controlling
telemarketing. Now do more.''
That is why I welcome your complimentary federal law.
I'm hoping that you can do more by amending the ``Telemarketing and
Consumer Fraud and Abuse Prevention Act''--providing our citizens with
additional protections. A national ``do not call'' database, linked to
state lists, makes sense for both businesses and citizens. Requiring
notification that these databases exist gives citizens added power to
decide whether or not they want to be called.
In closing, I encourage you to apply these requirements to everyone
who makes unsolicited calls to our citizens for the purpose of sales,
proposals and other offers of products or services.
Thank you, Mr. Chairman, for your work on this very important issue
and for giving me the opportunity to address your committee. I welcome
your committee's questions.
Mr. Tauzin. Thank you. Appreciate it.
Now we will turn to the AARP and we are pleased to welcome
Ms. Virginia Tierney, a Member of the Board of Directors in
Washington, DC. I might mention to you that despite what my
friends teasingly said my mother gets angry when I don't call.
So I have that additional problem. We are pleased to hear your
testimony.
STATEMENT OF VIRGINIA TIERNEY
Ms. Tierney. Being a mother I can relate to that. As you
said, my name is Virginia Tierney, and I am a member of AARP's
board of directors. On behalf of the Association I thank you
for inviting us to offer testimony on two pieces of legislation
that aim to curtail the practice of telemarketing fraud. Both
H.R. 3100, the Know Your Caller Act of 1999, and H.R. 3180, the
Telemarketing Victims Protection Act, offer consumers needed
protection from the general nuisance of telemarketing while
working to shield them from potential fraud. In our comments
this morning, AARP will provide the committee with input on two
of these important bills.
Telemarketing fraud is a major concern to AARP because of
the severe effects it has on older Americans who are victimized
in disproportionate numbers. In 1996 we launched a campaign
against telemarketing fraud that involved research examining
older victims and their behaviors, partnerships with
enforcement and consumer protection agencies and repeated
delivery of a consistent research based messages and that
fraudulent telemarketers are criminals, don't fall for a
telephone line.
For the past 3 years AARP has repeated this warning to
consumers through public service announcements, educational
workshops and program activities. AARP believes that these two
pieces of legislation, if enacted into law, will make it easier
for consumers to heed AARP's advice and will reduce consumer
susceptibility to deception over the phone.
H.R. 3100 includes provisions that are consistent with
AARP's work on telemarketing fraud legislation at the State
level as well as supporting comments the Association has made
to the Federal Trade Commission. The main component of H.R.
3100 is the section 2 prohibition of interference with caller
identification services. AARP believes that telemarketers
should be prohibited from blocking caller identification
devices used by consumers. Telemarketers routinely argue that
consumers can screen calls they do not wish to receive through
the use of answering machines or call identification services.
But unfortunately many telemarketers render the caller
identification devices useless by blocking the name and phone
number, preventing a consumer from viewing the information. The
prohibition in section 2 will assist consumers in screening
unwanted calls consistent with the argument made by the
telemarketers.
AARP also supports the provision in H.R. 3100 that requires
that a telephone number be provided to consumers if they want
to be included on a ``do not call'' list. The requirement will
help facilitate greater information about and access to being
placed on these lists.
H.R. 3180 includes provisions that would protect consumers
as well. Amending the Telemarketing and Consumer Fraud and
Abuse Prevention Act to require that telemarketers notify
consumers that they have the right to be placed on either the
Direct Marketing Association'S, DMA, ``do not call'' list or
the appropriate State ``do not call'' list will foster greater
knowledge and use of these lists.
Since AARP research has shown that many consumers are
unaware that this right exists, the individual notification is
critically important. Additionally, the prohibition on calls
being made between the hours of 5 and 7 p.m. is a welcome
relief to consumers who have grown weary of dinner time
interruptions.
While the vast majority of the provisions of H.R. 3180 are
consistent with AARP's advocacy efforts, we are concerned about
one element of the bill. There is a clause in the bill that
requires a telemarketer to have the consumer's name added
either to the DMA or appropriate State ``do not call'' list.
AARP would prefer that the consumer call to place his or her
name on the respective lists rather than the telemarketer. This
would reduce the likelihood of an error occurring that would
leave that consumer off a list and would ensure that the
consumer would get a firsthand account of the extent or
limitations of protections the DMA or State specific ``do not
call'' lists would provide.
Mr. Chairman, in conclusion, AARP welcomes your efforts to
enact legislation designed to reduce fraudulent telemarketing
situations. H.R. 3100 and H.R. 3180 are well crafted efforts to
accomplish that goal. Passage of legislation that combines the
key provisions in these bills will go a long way toward
providing consumers with safeguards against deceptive
telemarketing calls, keeping those consumers who will be
susceptible to falling for a telephone line from ever speaking
to a telemarketer if they so choose. Thank you, and we would be
very glad to answer any questions.
[The prepared statement of Virginia Tierney follows:]
Prepared Statement of Virginia Tierney, Member, AARP Board of Directors
Mr. Chairman and Members of the Committee: My name is Virginia
Tierney and I am a member of the Board of Directors of AARP. On behalf
of the Association, I thank you for inviting us to offer testimony on
two pieces of legislation that aim to curtail the practice of
telemarketing fraud. Both H.R. 3100, the ``Know Your Caller Act of
1999,'' and H.R. 3180, the ``Telemarketing Victims Protection Act,''
offer consumers needed protection from the general nuisance of
telemarketing while working to shield them from potential fraud. In our
comments this morning, AARP will provide the Committee with input on
these two important bills.
Telemarketing fraud is a major concern for AARP because of the
severe effects it has on older Americans, who are victimized in
disproportionate numbers. In 1996, the Association launched a campaign
against telemarketing fraud that has involved research examining older
victims and their behavior, partnerships with enforcement and consumer
protection agencies, and repeated delivery of a consistent research-
based message. That is: ``Fraudulent telemarketers are criminals. Don't
fall for a telephone line.'' This slogan came into being after AARP
qualitative research revealed that although older consumers knew
telemarketing fraud was wrong, they found it hard to believe that it
was a crime. Our research suggested that older consumers must be
convinced that fraudulent telemarketers are criminals before they will
exercise greater caution.
The Association believes that the two pieces of legislation under
discussion today, if enacted into law, will make it easier for
consumers to heed AARP's advice and will reduce their susceptibility to
deception over the phone.
H.R. 3100, the ``Know Your Caller Act of 1999,'' introduced by
Congressman Frelinghuysen, includes provisions that are consistent with
provisions AARP has advocated the state level and to the Federal Trade
Commission (FTC). AARP has voiced support for a similar piece of
legislation that has been introduced in the Senate, Senators Frist and
Robb.
The main component of H.R. 3100 is the Section 2 ``Prohibition of
Interference with Caller Identification Services.'' AARP believes that
telemarketers should be prohibited from blocking caller identification
devices used by consumers. Telemarketers often argue that consumers can
screen calls they do not wish to receive through the use of answering
machines or caller identification services. Unfortunately, many
telemarketers render the caller identification devices useless by
blocking the name and phone number, preventing a consumer from viewing
the information. The prohibition in Section 2 of H.R. 3100 will assist
consumers in screening unwanted calls, consistent with the argument
made by telemarketers. Further, the provision is written so as to
ensure that the law is applied fairly. A telemarketer would not be
liable for the inadvertent failure of a caller identification system.
AARP also supports the provision in H.R. 3100 that requires that a
telephone number be provided to consumers if they want to be included
on a ``do-not-call'' list. This requirement will facilitate consumers'
learning about and being placed on these lists. Finally, Congressman
Frelinghuysen's legislation addresses another of AARP's concerns by
prohibiting the use of ``do-not-call'' lists for any other direct
marketing purpose. This will protect consumers who unwittingly request
to be on such lists, only to be targeted by direct mail or other
telemarketing solicitations.
The ``Telemarketing Victims Protection Act,'' H.R. 3180, introduced
by Congressman Salmon, includes consumer protection provisions as well.
Amending the Telemarketing and Consumer Fraud and Abuse Prevention Act
to require that telemarketers notify consumers that they have the right
to be placed on either the Direct Marketing Association's (DMA) ``do-
not-call'' list or the appropriate State ``do-not-call'' list, should
foster greater knowledge and use of these lists. Since AARP research
has shown that many consumers are unaware that this right exists,
individual notification is critically important. Additionally, the
prohibition on calls being made between the hours of 5 and 7 p.m. is a
welcome relief to consumers who have grown weary of dinner-time
interruptions.
While the majority of the provisions of H.R. 3180 are consistent
with AARP's advocacy efforts, we are concerned about one element of the
bill. There is a clause in the bill that requires the telemarketer to
have the consumer's name added to either the DMA or appropriate state
``do-not-call'' list. AARP would prefer that the consumer call to place
his or her name on the respective list rather than the telemarketer.
This would reduce the likelihood of an error occurring that could leave
that consumer off of the lists. It would also ensure that the consumer
would get a first-hand account of the extent or limitations of
protections afforded them by either the DMA or state-specific ``do-not-
call'' lists.
Mr. Chairman, in conclusion, AARP welcomes your efforts to enact
legislation designed to reduce fraudulent telemarketing situations.
H.R. 3100 and H.R. 3180 are well-crafted efforts to accomplish that
goal. Passage of legislation that combines the key provisions in these
bills will go a long way toward providing consumers with safeguards
against deceptive telemarketing calls, and keeping those consumers who
may be susceptible to ``Falling for a Telephone Line'' from ever
speaking to telemarketer, if that is their choice.
On behalf of AARP, thank you again for providing us with this forum
to discuss deceptive telemarketing practices and to comment on the
legislative proposals before you. AARP stands ready to work with you in
seeking final passage of these important bills.
Mr. Tauzin. Thank you very much, Ms. Tierney.
Finally, Mr. Steven Brubaker, Senior VP of InfoCision
Management Corporation, but also representing the American
Telemarketers Association.
Mr. Brubaker.
STATEMENT OF STEVEN R. BRUBAKER
Mr. Brubaker. Thank you, Mr. Chairman and members of the
subcommittee. It is my privilege to address you today on behalf
of the ATA and my company InfoCision. We at InfoCision
specialize in providing inbound and outbound teleservices for
many groups, nonprofit groups and commercial companies. We are
members not only of the ATA but also of the Direct Marketing
Association, the DMA. The ATA is dedicated to representing
solely the teleservices industry.
We represent the providers and users of teleservices in the
U.S. And around the globe. Today we have more than 2000 members
in 43 States and 19 countries. According to a report issued by
the Texas House of Representatives last year, telemarketing is
now the single largest direct marketing system in the country
employing more than 3.4 million people nationwide and
generating--now the number is even going up again--$550 billion
in revenue.
Mr. Sawyer. Told you.
Mr. Brubaker. We like that one better. Job growth in this
industry is more than three times than the national job growth
average. With those kind of numbers it is obvious that
consumers are using the telephone to make informed decisions
and that many--and the majority of the companies are doing it
legally and ethically and responsibly.
The Association is dedicated to promoting a positive image
of our industry to talk about our ethical practices. We have
established a code of ethics, which I will show you here, which
attempts to educate our members on the legal and ethical
behavior, how to do it responsibly.
We are also a founding member of the FTC's Partnership for
Consumer Education as part of our continuing effort to help law
enforcement agencies identify and prosecute criminals posing as
telemarketers. The ATA and the FTC have joined with the
nationwide consumer education program that began in 1996. As
part of this campaign we have distributed a brochure which we
call Consumer Guidelines. In here we tell consumers their
rights and give them the 800 number for the National Fraud
Information Center. We basically suggest to consumers if an
offer sounds too good to be true it probably is.
Our commitment to encouraging and conducting honest
telemarketing is without question. It is with that background
that we offer comments to the proposed legislation. We are
strongly opposed to the major provisions of H.R. 3180, which
would restrict telemarketing calls to residential consumers by
entities that fall under the telemarketing sales rule between
the so-called dinner time hours of 5 and 7 p.m. Under Federal
regulations, implemented by both the FCC and the FTC,
telemarketers are guaranteed the right to call residential
consumers between 8 a.m. and 9 p.m., and we feel that is a rule
of reasonableness. Stating a dinner time hour restriction would
negatively impact our industry, particularly those companies
who focus on marketing to consumers.
As an example, one of our members in Charlotte, North
Carolina, Personal Legal Plans, they conduct 100 percent of
their business contacting consumers between 5 and 7 p.m.
Reducing their calling by 50 percent would put this 20-year
firm out of business. Company sales would drop drastically and
its ability to hire a qualified labor force would certainly be
impossible. Few people would be willing to drive to work for
only 2 hours of work. They pay on average over $14 an hour to a
labor force consisting of retirees, single patients and daytime
stay at home moms, all of whom rely on the evening employment
to meet their living expenses.
The wisdom of government legislating meal times is really a
problem. Meal times differ from household to household. And
just setting a standard meal time of 5 to 7 will still result
in calls being made during someone's dinner time whether they
eat before 5 or after 7. In short there will still be calls
during dinner.
Now, when our company reaches someone that tells us they
are having dinner, we apologize profusely and ask them if there
is a better time for us to call. We certainly never want to
upset anyone because our clients want us to build a
relationship with the customer. As we have seen with other
legislative and regulatory attempts at both the Federal and
State level to restrict calling, any legislation would
certainly cause exemptions for favored groups and we talked a
bit about that.
We are all aware that there are several areas of
constitutionally protected speech that use telemarketing to
contact consumers, nonprofits, political campaigns, and that
this regulatory scheme will not apply to those types of calls.
These exemptions will frustrate consumers and frustrate the
purpose of the legislation when people were promised 2 hours
free from telemarketing.
Applied to this legislation, the practice of granting
exemptions would simply create an exclusive 5 to 7 p.m. niche
for marketing for the favored entities. Our experience has been
that those who profess to be annoyed at telemarketing are not
selectively annoyed. They are universally annoyed regardless of
who the caller is. A call from an exempted group during the
restricted hours is still a call. The excluded groups are then
pushed to the 7 to 9 p.m. timeframe, which would result in an
upsurge of calls, as we have stated.
How would restaurants survive if they couldn't open until 7
p.m. After the dinner time hour? How would retail
establishments survive if they weren't able to be open the 2
weeks or even 2 days before Christmas? How would movie theaters
survive if they couldn't be open in the evenings?
The consumer has options. They can use an answering
machine, install caller ID or privacy manager type product,
have a cell phone or get an unlisted number. While the intent
of H.R. 3108 is to protect consumers from fraud, consumers and
legitimate users of the telephone will ultimately be the ones
who bear the burden of this bill.
Telemarketing provides many benefits to consumers and the
economy. We provide a cost effective way for legitimate
business to reach potential consumers. We also provide
consumers with lower costs for goods and services, a wider
variety of choice, and increased convenience to make their
purchase decisions. Consumers are able to complete their
transactions quickly and conveniently from the comforts of
their own home, thereby saving any inconvenience.
H.R. 3180 also contains a provision that would require
telemarketers to advise consumers they have the right to be
placed on a ``do not call'' list, even if the consumer does not
make such a request. Such a requirement is inconsistent with
the telemarketing sales rule. Any person requesting to be
placed on a list can already--already has that right. Making a
telephone contact is a legal action. It is inappropriate to
require honest businessmen and women engaged in a lawful
legitimate business practice to Mirandize the customers they
contact.
The proposed legislation would also require telemarketers
to obtain and reconcile on a regular basis the DMA's telephone
preference service list. This is a voluntary program. We
believe it is inappropriate for the FTC to codify a voluntary
program. The legislation presented here assumes that consumers
do not already know their rights. How can we assume this? Last
year every household in America received a postcard from
Project kNOw Fraud listing their rights when receiving a phone
call. Every phone book in the country has a page at the
beginning listing telemarketing consumers' rights. And we have
already documented the FTC's Partnership for Consumer
Education.
I personally have proof in our company that consumers do
know their rights. We manage internal company specific lists
for all our clients whether they are exempt or not. And we have
seen the requests to be added to the list triple in the last
few years.
As we mentioned earlier, the industry is already regulated
by both the FCC and the FTC. One of the key areas in each rule
is requiring companies keep specific ``do not call'' lists. We
feel that the company specific list is the best way to empower
consumers to choose which calls they want to receive and which
calls they would like to keep out of their home. We feel the
best way to protect consumers from fraud is to provide
additional funding for the Federal and State law enforcement
agencies and to help to protect consumers in that way.
And the final provision of 3180 and the major tenet of 3100
is to prohibit the blocking of caller ID. I would welcome
questions on that because we have no opposition to the point of
blocking. We believe that using a blocking of any kind, whether
it is per call blocking, per line blocking or any other method,
is wrong.
We are proud of the business we are in and we have
supported measures in several States just like this; however,
we have been told from the telephone companies that it is not
possible to provide that information. In my own company I have
asked the telephone company that we work with to allow us to
provide our name and number to consumers over our T-1 and DS-3
digital lines, and they have told us that is not possible.
Thank you.
[The prepared statement of Steven R. Brubaker follows:]
Prepared Statement of Steven Brubaker on Behalf of the American
Teleservices Association
Mr. Chairman and Members of the Subcommittee: I appreciate the
opportunity to appear before the Subcommittee today to discuss the
important legislation pending before you on telemarketing concerns. I
have a prepared statement, which I would like to present to the panel.
It is my privilege to address you today on behalf of the American
Teleservices Association, the ATA. My name is Steve Brubaker. I am
Senior Vice President of Operations for InfoCision Management
Corporation headquartered in Akron, Ohio. We are a leading teleservices
agency employing nearly 2000 people. We specialize in providing inbound
and outbound call center services for many non-profit organizations and
commercial companies. We are members not only of the ATA, but also of
the Direct Marketing Association, the DMA.
The ATA is the trade association dedicated solely to the
teleservices industry, representing the providers and users of
teleservices in the United States and around the globe. The ATA was
founded in 1983 to provide leadership and education in the professional
and ethical use of the telephone, to increase service effectiveness,
enhance customer satisfaction and improve decision-making.
Today, the ATA has more than 2,000 members in 43 states and 19
countries, representing all segments of the industry, including
telemarketing service agencies, consultants, customer service trainers,
providers of telephone and Internet systems, and the users of
teleservices, such as advertisers, non-profit organizations, retailers,
catalogers, manufacturers, financial service providers, and many
others.
According to a report issued by the Texas House of Representatives
in 1999, the telemarketing industry is now the single largest direct
marketing system in the country, employing more than 3.4 million people
nationwide and generating $550 billion in annual revenue. Job growth in
this industry is more than three times that of the overall national job
growth average. With those kind of numbers, it is obvious that U.S.
consumers are making use of the telephone to purchase goods and
services, they enjoy having that option, and will continue to use it.
Those numbers also suggest that the vast majority of telemarketing
companies are doing it legally, ethically and responsibly.
The ATA membership is made up of a wide range of businesses and
other entities, large and small, national and local. It is important to
note that while our membership includes major players in the American
economy such as AT&T, Chase Manhattan, the Chicago Tribune, IBM, GTE
and SBC, it also includes a multi-faceted group of users of
teleservices, such as the American Cancer Society, the Maryland
Department of Business & Economic Development, Highlights for Children,
the City of Austin, Texas, the Metropolitan Opera, Ohio State
University, St. Judes Children's Research Hospital, the Collin Street
Bakery, and the Texas Work Force Commission.
The Association is dedicated to promoting a positive image of
telephone marketing through the highest standards of ethical practices
throughout the industry. A primary mission of the ATA is to educate its
members on the laws that govern teleservices through its annual
legislative conferences, other educational seminars and conferences,
and through its membership bulletins detailing trends in legislation
affecting the industry. The ATA also serves as a resource to the
Congress, state legislatures, state attorneys general and federal
regulatory agencies in drafting appropriate and focused legislation and
rules to combat deceptive practices. In support of that goal, the ATA
has established a Code of Ethics, which attempts to educate Association
members, the public and public officials concerning the legal and
ethical behavior for telemarketing. The Code is provided to all members
as they join the Association and is available by request to the general
public. It is also posted on the ATA's website (www.ataconnect.org).
The ATA is also a founding member of the FTC's Partnership for
Consumer Education. As part of our continuing effort to help law
enforcement agencies identify and prosecute criminals posing as
telemarketers, the ATA and the FTC launched a nationwide consumer
education program in 1996. The campaign's goal was to promote the
Telemarketing Sales Rule. As part of that nationwide education
campaign, the ATA distributes a brochure, entitled Consumer Guidelines,
which contains tips for consumers on how they can obtain safe and
satisfying sales and services through the convenience of the telephone
and identify those tactics used by criminals in their fraudulent
activities.
The ATA's commitment to encouraging and conducting legitimate and
honest telemarketing programs is without question. It is with that
background that we offer the following comments regarding the
legislation pending before the Subcommittee today.
We are strongly opposed to the major provisions of H.R. 3180, which
would restrict telemarketing calls to residential consumers by entities
that fall under the FTC Telemarketing Sales Rule between the so-called
``dinner time'' hours of 5:00 pm and 7:00 pm. Under federal regulations
implemented by the Federal Communications Commission in 1992 and the
Federal Trade Commission in 1995, telemarketers are guaranteed to the
right to call residential consumers between the hours of 8:00 a.m. and
9:00 p.m.
Instituting a ``dinner time'' hour restriction would negatively
impact the telemarketing industry, particularly those companies who
focus on marketing goods and services to consumers. As an example,
small companies such as Personal Legal Plans, one of our members in
Charlotte, NC, generate 100% of its business contacting consumers
between the hours of 5 PM and 9 PM. Reducing the calling hours by 50%
would put this twenty (20) year firm out of business. Company sales
would drop drastically and its ability to hire a qualified labor force
would be almost impossible. Few prospective employees would be willing
to drive to work for only two (2) hours of work. Personal Legal Plans
pays on average over $14 per hour to a labor force consisting of
retirees, single parents, and daytime stay-at-home moms--all of whom
rely on this evening employment to meet their living expenses.
The justification provided for the bill is based on constituent
feedback that objects to telemarketer contacts at mealtimes. While no
elected official can take voter concerns lightly, there is some
question as to whether those that complain are in fact representative
of the voting population. No scientifically based data has been
presented in support of this premise. What has been advanced is
essentially anecdotal in nature. Since industry reports that sales
figures show the evening hours are the overwhelming prime period for
consumer contacting, the question arises--If the majority of consumers
object to evening contacts, then who is conducting all this business?
The complaints clearly are not manifest in consumer turn-off.
The wisdom of government legislating mealtimes for society is
fraught with far-reaching implications. Mealtime differs from household
to household. An arbitrary selection of a ``standard'' mealtime will
result in calls being made during mealtimes of those who do not conform
to the federal standard. In short, there will still be contacts during
the dinner hours, whenever they might be. As we have seen with other
legislative and regulatory attempts at the federal and state level to
restrict calling, any legislation would be laden with exceptions for
favored groups.
We are all well aware that there are several areas of
constitutionally protected speech that use telemarketing to contact
consumers, including non-profits and political campaigns, and that this
regulatory scheme will not apply to those types of calls. These
exemptions will serve to frustrate the purpose of this legislation and
frustrate those consumers that had been promised two hours free from
telemarketing each night.
Applied to this legislation, the practice of granting exemptions
would simply create an exclusive 5pm-7pm niche for telephone marketing
for the favored entities. So we must ask the question: does a dinner
time bill stop calls during the legislated timeframe? No, it simply
leaves the field to the exempted groups.
Our experience has been that those who profess to be annoyed at
telemarketing contacts are not selectively annoyed; they are
universally annoyed, regardless of who the caller is. A call from an
exempted group during the restricted hours is still a call. The
excluded groups are then pushed to the 7pm-9pm timeframe, which will
surely result in an upsurge of calls at those times. This will, no
doubt, result in calls for more legislation to protect the ``post
dinner time'' hours. Carried to its logical conclusion, we will soon
have ``breakfast time'' hours, ``lunch time'' hours, ``after school''
hours, and ``daylight savings'' hours. In no time, the entire
telemarketing industry will have just that--no time.
How would restaurants survive if they couldn't be open after 7 PM
(after the so called dinner hour)? How would retail establishments
survive if stores were required to be closed the last two weeks, or
even the last two days, before Christmas?--How would movie theatre's
survive if they couldn't be open in the evenings? The consumer--not
only has the option of not answering the telephone, they could use an
answering machine, install caller ID or a ``Privacy Manager''-type
product, have a cellular phone, and get an unlisted number.
While the intent of H.R. 3180 may be to protect consumers from
fraud, consumers and legitimate users of the telephone will ultimately
be the ones who bear the burden of this bill. Telemarketing provides
many benefits to consumers and the economy. Telemarketing provides a
cost-effective way for legitimate businesses to reach potential
consumers. Telemarketing also provides consumers with lower costs for
goods or services, a wider variety of choices, and increased
convenience to make their purchasing decisions. Consumers are able to
complete their transactions quickly and conveniently from the comforts
of their own home, thereby saving the time, effort and inconvenience of
traveling to the store.
H.R. 3180 also contains a provision that would require
telemarketers to advise consumers they have the right to be placed on a
do-not-call list, even if the consumer does not make such a request.
Such a requirement is inconsistent with the provisions of the
Telemarketing Sales Rule (TSR) administered by the Federal Trade
Commission. Any person requesting to be placed on a do-not-call list
already has that right. Making a telephone contact is a legal action.
It is inappropriate to require honest businessmen and women, engaged in
a lawful, legitimate business practice, to ``Mirandize'' the consumers
they contact.
The proposed legislation would also require telemarketers to obtain
and reconcile, on a regular basis, the Direct Marketing Association's
do-not-call list or the appropriate state list. The DMA's Telephone
Preference Service was developed as a voluntary program; it is wholly
inappropriate that the Federal Government should now attempt to codify
a voluntary program. Additionally, for the Federal Government to
endorse a private company is ethically questionable.
The legislation presented here assumes that consumers do not
already know their rights. How can we assume this? Last year every
household in America received a postcard from ``Project kNOw Fraud''
clearly listing their rights when receiving a call. Every phonebook in
the country has a page at the beginning listing telemarketing
consumers' rights. And, we have already documented the FTC's
Partnership for Consumer Education.
I personally have proof that a large number of consumers do know
their rights. Our company manages internal company-specific do not call
lists for each of our clients and we've seen the requests to be added
to the list triple in the last few years.
As we mentioned earlier, the telemarketing industry is already
regulated nationwide by both the FCC rules implementing the Telephone
Consumer Protection Act and the FTC's Telemarketing Sales Rule
(``TSR''). One of the key areas in each of these rules is the
requirement that companies keep specific Do-Not-Call lists of
individuals who have requested not to receive any more telemarketing
calls from that company.
The telemarketing industry is a unique industry. The primary
expenses of the business are determined by the time spent on the
telephone. A company is often measured by an amount of dollars
generated per telephone or per chair. The single greatest predictor of
failure in the industry is low per chair production. And the single
greatest contributor to low per chair production is spending time on
the telephone with people who don't want to talk to you. Thus the
industry goes to great lengths to target only those consumers who are
likely purchasers of their products. The successful telemarketer is the
business that talks to the fewest uninterested parties. Consequently,
it is in the industry's best interests to keep a detailed ``Do-Not-
Call'' list. Not only does it make sense for a company's bottom line,
but it increases morale and production among the sales force if they
are not talking to hundreds of people who say ``No'' at the beginning
of the call.
Additionally, the company specific ``Do-Not-Call'' list is the best
way to empower consumers to make the type of informed purchasing
decisions that are necessary for a satisfactory sale. For consumers who
do not want to receive calls from a particular company telemarketing
them goods or services, all they have to do is tell the telemarketer
during the call. However, for those consumers who want to receive calls
or really only want to receive certain types of calls, the existing
federal rule allows them the freedom to determine which calls they want
to receive and prohibits those calls they don't. This is an area where
consumers alone hold the key to keeping telemarketers out of their
home.
We maintain the best way to protect consumers from fraud is through
increased consumer education and funding for the federal and state law
enforcement agencies, namely, the Federal Trade Commission, Federal
Communications Commission, and the Department of Justice and Federal
Bureau of Investigation, so efforts can be further continued and
coordinated to get the perpetrator of fraud off the telephone and
protect consumers--senior citizens in particular--from becoming victims
of telemarketing fraud. The solution is not to limit the telemarketing
industry's right to call to consumers or establishing a precedent that
would not be cost effective or beneficial to industry or consumers.
A final provision in H.R. 3180, and the major tenet of H.R. 3100 is
to prohibit the blocking of Caller ID devices. The ATA has no
opposition to this point. We believe that using Caller-ID blocking of
any kind, whether it is per-call blocking, per-line blocking or another
similar method, is wrong. The members of the ATA are proud of the
business they are in and the service they provide to consumers. They
would rather consumers knew exactly who they were taking calls from and
who they were purchasing goods or services from. The ATA supported
similar measures in several states in recent years. However, any
requirement that either the telemarketer's name or the word
``telemarketer'' show up on a consumer's Caller-ID will pose a
significant problem for the majority of telemarketers, as in most
instances, the technology does not exist to allow such a designation to
be displayed.
It is my understanding that in most cases, telemarketing calls
originating on a telephone service outside the consumer's local calling
area and being routed over a switch such as a T-1 line that is
different from the consumer's local service provider will not allow the
caller's name or any other information to be displayed. Obviously we
cannot support legislation that we cannot, despite our best efforts,
comply with.
Thank you, and I am happy to take any questions.
Mr. Tauzin. I thank the gentleman. I thank you all. The
Chair recognizes himself and other members in order. Let me
first, Mr. Brubaker, your testimony, what you have been told
contradicts what Ms. Herrington apparently was told that there
was no problem with the T-1 lines. I think obviously we are
going to need to hear from the phone companies to find out what
is correct. If your position is that the marketers don't oppose
legislation that requires companies not to block information,
which I am glad you took that position because frankly I was
going to question you about it, you know, because what is our
consumer rights if I can't call you because I don't know who
you are when you are bothering me at any time of the day I
don't want to be bothered. So obviously we need to find out
what are the technological problems with that. But clearly
there seems to be some consensus that that at least ought to be
part of some legislative remedy.
Let me on the other hand, however, tell you that you make a
great point. I want to hear comments from the other witnesses
here. You make a great point that these laws tends to have a
lot of exemptions. The first panel was met with questions about
exemptions from some of our members. Are physicians exempt, are
teachers exempt from calling their students? I raise the
question of political call exemptions, nonprofit exemptions. In
other words--and this is the point I think you made--if we were
to adopt and could adopt constitutionally the no call between 5
and 7 p.m. rule, it would only apply to a certain class of
calls. The consumers would still get political solicitations,
nonprofit solicitations, they would still get physicians
calling patients and teachers calling kids all during the so-
called dinner hour, and my suspicion is that consumers would
think that the legislation was a fraud, that we defrauded them.
They are still being bothered.
The fact is that the nonprofits and the political
solicitations would concentrate on the hours when the
commercial callers are not permitted to engage consumers and
that would probably get as many calls. They would just be
different calls during the lunch hour. And that I think is
probably the best point you made. I would love to hear comment,
feedback from the rest of you on the panel. Any one of you on
that point?
Mr. Hatch-Miller, you commented on the many exemptions. If
I am right about that, if all we would be doing if we passed a
law that said some callers can't bother you, the commercial
ones defined in the law, but everybody else can, including
political calls and nonprofit solicitations and calls by other
people not necessarily selling a product, maybe only trying to
set up a meeting with you to sell their product, all these
exemptions would end up bothering us as much as the current
calls bother us and yet people would have said I thought you
passed a law to protect us. What the heck is wrong with you
all? I can't write a good law? Would we be better with that
problem?
Please come back to me. Any one of you. Ms. Harrington.
Ms. Harrington. We have concern about the exemptions that
are already written into the FTC Act. Our jurisdiction under
the telemarketing sales rule goes only as far as our general
jurisdiction goes. I think that the Congress wisely defined
telemarketing to cover plans, programs and campaigns in
connection with the sale of goods. ``Sale'' seems to me to be a
fair term of inclusion. So our concern----
Mr. Tauzin. So we have done that.
Ms. Harrington. It has been done, but already the playing
field is uneven because----
Mr. Tauzin. But Mr. Hatch-Miller told us when we try to
legislate in this area, when we tightly define who is
prohibited, even then the politics of exemption works its
weight and that all of the States have experienced that. I
suspect we would experience it in this committee. There would
be members on both sides of the aisle saying, hey, I want an
exemption for my favorite entity that is making these phone
calls. Would we not be faced with the same problem? Would we
end up not producing legislation that had to constitutionally
exempt a bunch of people and politically exempt a bunch of
people, and where would we be when that happened?
Mr. Hatch-Miller. You raise a very important point. My
citizens are pretty straightforward. They are saying that they
don't want to be hassled by an intrusive call by someone
offering a product or a service, whether they are selling it to
them right then or they are trying to get them to sign up on a
list to try to get them to come to a meeting. It is the fact
they don't know who is calling them and they are being called
for a commercial purpose during a time they would rather have
for their own purposes. The simplest remedy also is for that
citizen to have a right to say I don't want to be called for
these kind of matters.
Mr. Tauzin. So let me interrupt you. Would a better,
simpler approach be instead of saying no calls by these
entities within these hours, to simply say that if a person
wanted to they could make a call, as Ms. Tierney pointed out,
themselves to put their names on a no call during whatever
hours they don't want to be on a call list that would be
maintained by either DMA or telemarketers or the state, whoever
we want to put in charge of such a list.
Please come back to me.
Ms. Tierney. I think AARP's main concern about this is the
fraud and any way of eliminating fraud or preventing abuse in
that way, and so the telemarketers who are fraudulent are the
ones that we are particularly concerned about for the elderly
population. But another area is we found in a survey that was
done that many people did not know, they weren't aware that
they could be on a do not call list, and so we are very anxious
that that be made more available to a large number of people
and there be education and awareness about this. And some of
the other points that you have brought up about this in
retrospect don't seem to be as important to the elderly
population as the two I have mentioned.
Mr. Tauzin. Thank you very much. Let me turn now to the
ranking member, Mr. Dingell, who is here and I would like to
recognize him for a round of questions.
Mr. Dingell. Mr. Chairman, thank you, appreciate your
courtesy. Mr. Brubaker, you are here to oppose the legislation,
is that right?
Mr. Brubaker. We are definitely opposed to 3180. As I do
say, we do support the efforts of 3100 to block.
Mr. Dingell. Now, I'd like to address if I could, please,
your opposition to some of your current business practices. As
I note under existing law, the FTC has the power to put forward
regulations and to require certain kinds of behavior and
compliance with the law. The Commission has said, and I now
quote, shall have--shall include in such rules respecting other
abusive telemarketing acts or practices, and then coming on
down under paragraph (c), a requirement that any person engaged
in telemarketing for the sale of goods or services shall
promptly and clearly disclose to the person receiving the call
that the purpose of the call is to sell goods or services and
to make such disclosures as the Commission deems appropriate,
including the nature and price of goods and services. You are
aware of that law, are you not?
Mr. Brubaker. Yes.
Mr. Dingell. Do you support it or you oppose it?
Mr. Brubaker. We support it.
Mr. Dingell. Now, it was reported yesterday in Roll Call
and in the Washington Post that your company InfoCision
Management has been placing telemarketing calls to doctors'
offices, is that correct?
Mr. Brubaker. I am not familiar with that article.
Mr. Dingell. Has your firm been placing calls to doctors'
offices as a part of business for clients, or do you know?
Mr. Brubaker. I am not sure what----
Mr. Dingell. Let me put this question. Your firm has been
placing calls, your firm has not been placing calls or you
don't know which is the answer ?
Mr. Brubaker. We have a number of different campaigns for
our clients running. I couldn't speak to any particular one
today.
Mr. Dingell. Well, I tell you what, I think you ought to
have a copy of the article here, and let's then address the
article. Are you going to tell me then that employees of your
firm did not place calls to physicians' offices? You either did
or you did not or you don't know. Which is the case?
Mr. Brubaker. I will be happy to review it.
Mr. Dingell. No, no, no. I have got you here now and I
won't have you in a little bit. I don't want you to review it.
I just want you to tell me whether your firm placed these calls
or not or whether you know about it.
Mr. Brubaker. I would need to review that and take it for
the record and respond later.
Mr. Dingell. Did your employees identify themselves when
placing these calls?
Mr. Brubaker. Again I am not familiar with this particular
campaign.
Mr. Dingell. What is your precise position in the company?
Mr. Brubaker. I oversee our operations.
Mr. Dingell. Pardon?
Mr. Brubaker. I oversee our operations.
Mr. Dingell. What does that mean?
Mr. Brubaker. It means I am responsible for our call center
operations, the hiring, the development of the staff.
Mr. Dingell. You don't know what the staff does?
Mr. Brubaker. Well, excuse me, if I may say that I do know.
I am----
Mr. Dingell. Who would know what the staff does?
Do you know what the staff does? Do you know what the staff
does or do you not know what the staff does?
Mr. Brubaker. Of course I do, sir.
Mr. Dingell. You do.
Do you have a client, Physicians Referral Service?
Mr. Brubaker. Not that I am aware of.
Mr. Dingell. Not that you are aware of.
Have you ever heard the name, Physicians Referral Service?
Mr. Brubaker. I apologize. I honestly would have to look
into that. I do not know.
Mr. Dingell. Is the National Republican Campaign Committee
a client of your firm?
Mr. Brubaker. Well, I cannot discuss particular clients;
our confidentiality precludes me from talking about that.
Mr. Dingell. You can't tell us whether you have clients?
Mr. Brubaker. I would ask whether that is relevant to our
discussion today, to talk about H.R. 3180.
Mr. Dingell. Well, we are talking here about abuses of
telemarketing practices which are referred to in articles which
have appeared in the press, first Roll Call, and then second of
all, The Washington Post. You have not read The Washington
Post?
Mr. Brubaker. I don't read The Washington Post or Roll
Call.
Mr. Dingell. Where are you stationed?
Mr. Brubaker. Akron, Ohio.
Mr. Dingell. Akron, Ohio. And this has not been reported in
Akron, Ohio?
Mr. Brubaker. I am not familiar with it.
Mr. Dingell. Okay.
Now, when your company places telemarketing calls on behalf
of other businesses, do you disclose the name of the business
for whom you are calling?
Mr. Brubaker. Absolutely. That is our intent.
Mr. Dingell. Do you always do that?
Mr. Brubaker. It is my understanding that we do.
Mr. Dingell. Well, just yes or no. I gather you are saying
the answer to that question is yes.
Now, when you place calls on behalf of political entities,
do you identify the parties on behalf of whom you are calling?
Mr. Brubaker. I believe that we do. We are----
Mr. Dingell. Well, you either do or you don't. Which is the
answer?
Mr. Brubaker. We are clearly, in any of our campaigns for
our clients, supporting the----
Mr. Dingell. Do you identify the client on behalf of whom
you are calling?
Mr. Brubaker. We----
Mr. Dingell. Or do you not?
Mr. Brubaker. In every case that I am aware of, we do.
Mr. Dingell. Do you have written instructions which you
give to your callers?
Mr. Brubaker. Yes, we do.
Mr. Dingell. Would you submit copies of those written
instructions that you submit to your callers so that we can
know?
Now, we have already agreed that it is a requirement by law
or regulation that you identify the party on behalf of whom you
call; is that correct? That was part of--that was the provision
that I read to you earlier; is that right?
Mr. Brubaker. My question is, I don't understand this line
of questioning.
Mr. Dingell. You don't?
Mr. Brubaker. I don't understand what we----
Mr. Dingell. Well, just play along with me, because it is
interesting. Your firm has achieved a certain prominence in the
press into which we are inquiring on the subject.
Mr. Tauzin. The gentleman's time has expired.
Mr. Green. Mr. Chairman, if I could ask that this panel be
sworn. I just left an O&I committee hearing, and I would like
to have this panel sworn just like we do in Oversight and
Investigations.
Mr. Tauzin. The Chair will remind all members, this is not
an O&I hearing, this is a general information hearing on the
subject of two bills, neither of which has anything to do with
political solicitations, and therefore it is outside the scope
of the hearing.
The gentleman is not in order.
The Chair will be glad to extend the time of the
gentleman----
Mr. Dingell. If the Chair would permit, I would simply like
to observe, I am talking about specific telemarketing practices
of the firm which is the employer of the witness of whom I am
inquiring.
Mr. Tauzin. The gentleman is permitted to ask his
questions. My only point is that this is not an O&I hearing.
The subject of this hearing is two bills which are before the
Congress, both of which deal with commercial telemarketing
sales practices, not with political solicitations or political
fund-raising nor, for that matter, other types of activities.
So the questions--I have tried to give the gentleman as
much latitude as I can. I simply want to point out that the
hearing is not about Mr. Brubaker's firm or his firm's
activities and political activities; the hearing is about two
commercial sales practices, of bills that are before the
committee only.
The gentleman's time has expired.
The Chair will be generous if the gentleman asks for an
extension of time.
Mr. Dingell. I will get more time on the next round, but I
would ask unanimous consent that the two articles from which I
am working be inserted in the record, the one from the
Washington Post and the one from Roll Call.
Mr. Tauzin. I think the two articles are already in the
record at this time.
Mr. Dingell. They are?
Mr. Tauzin. Yes, sir.
Mr. Dingell. Oh. May I ask that both of them are made
available then to the witness, so that he will know what it is
I am questioning him about. When the next opportunity comes to
the members of the committee, I will persist.
Mr. Tauzin. If the gentleman wishes to see those articles,
he certainly may.
Mr. Dingell. I thank the Chair.
Mr. Tauzin. The Chair recognizes the gentleman from
Illinois, Mr. Shimkus, for a round of questions.
Mr. Shimkus. Thank you, Mr. Chairman. I want to kind of go
back to the intent of the legislation proposed.
I would ask each panel member, starting with Ms.
Harrington, do you support--would you support legislation that
would require that anyone using the telephone not have the
ability to block their phone number?
Ms. Harrington. I don't think so. I think that when Caller
ID first became available, there was a very vigorous discussion
about the tension between the right of a call recipient to know
who is calling and the privacy interest that some have in being
able to block their identity.
For example, I remember that there was a concern about
women who might be calling from domestic violence shelters
being able to block the phone number that they are calling from
so that the location couldn't be discerned.
Mr. Shimkus. Why would a phone number address the location?
Ms. Harrington. Because there are Polk and other
directories widely available.
Mr. Shimkus. I think we discussed initially how, in
telephone that either phone numbers can be--they can be not
listed and addresses can be unlisted.
Ms. Harrington. That is true, but I am recalling quite a
vigorous debate about tensions between disclosure and privacy
for--if you are getting into all phone uses. The FTC, of
course, is concerned with commercial practices, not all uses.
Mr. Shimkus. Okay. Let's go to commercial practices. You
would be supportive of the all commercial practices of phone
numbers being listed?
Ms. Harrington. Yes.
Mr. Shimkus. Mr. Miller.
Mr. Hatch-Miller. Yes, I, too, would support that
commercial calls be open.
Mr. Shimkus. Ms. Tierney.
Ms. Tierney. I don't know that I have the right to speak
for AARP on the exact support of this legislation. Our interest
is that our membership be aware of what is available, what is
out there, and what we help them do if they wish to protect
their privacy, or to help them in any way possible.
Mr. Shimkus. Well, since you all have been invited to
testify in support or in opposition to the two pieces of
legislation, my friend and colleague, Rodney Frelinghuysen's
bill, is it the AARP's duty to support these two pieces of
legislation?
Ms. Tierney. These two pieces of legislation we do support.
Mr. Shimkus. Could you take back to the board the question
of what AARP support the requirement that commercial use of the
telephone must follow the display of the commercial phone
number?
Ms. Tierney. I would be very glad to take it back to the
board.
Mr. Shimkus. Thank you.
Mr. Brubaker, you have already testified that you would
support that?
Mr. Brubaker. Well, we are in support of prohibiting the
blocking of Caller ID. We are not in support of enforcing a
mandatory disclosure, because it is our understanding that that
is not technologically possible.
Mr. Shimkus. But we are talking about the same thing.
Mr. Brubaker. They are two different things really, though,
because you are talking about blocking. We are against the
blocking of Caller ID in any way. But if it is not there, if we
are using a T-1 line, which is a group of 24 circuits, there is
no number.
Mr. Shimkus. Congressman Salmon mentioned that. I really
concur with him, especially having served on this committee for
4 years. Technology, given the time, effort and energy and
finances, can overcome all of those. If you have to resort to
Direct Dial and prohibit the caller from doing star or pound 69
or star 69, prohibiting that, then they would be identified.
Mr. Brubaker. Well, we obviously would not be in support of
going back to Direct Dial.
Mr. Shimkus. I agree. But we do want our consumers to know
commercially who is calling them.
Mr. Brubaker. Sure we do. And if there is any way
technologically to do it, we would support it.
Mr. Shimkus. I would suggest that the industry start
looking for that option.
In the military, Mr. Chairman, we have that acronym KISS,
which means ``Keep it simple, stupid.'' and if you listen to
this debate and all of the permutations, we can evolve
ourselves into a do-not-call list, how is it funded, how is it
controlled, what are the time limits, what are the exemptions.
Mr. Chairman, I think a simple way to address this is, I
don't know if it is going to be possible to merge the two
pending bills together, because I think they represent--
Congressman Largent brought the questions, what are you trying
to do? Congressman Salmon's legislation is trying to prohibit
the actual calling, Congressman Frelinghuysen is really trying
to allow people to see who is calling them; and they are
different.
I don't know if it is going to be possible, but I would say
that if we can provide the ability of the consumer to see who
is calling them, and if it is at a time that they don't like,
then they have a number by which they can call back and make
formal application to no longer be put on that list. That is a
very simple, precise way of trying to address this without
addressing the unfunded mandate, who does it.
And I see us all trying to get to the same arena, and we
want to know who is calling us.
I think--Ms. Harrington, I think we have as much right to
know who is calling us as we do of placing a call to someone. I
don't think there is any difference. If you are talking free
speech--free speech, if a person goes to a corner and gets on a
soap box, and he is proclaiming free speech, everyone sees who
he is; and if someone comes to your door, you see who he is.
What I think is incumbent upon us is to make sure that when
someone intrudes on our house in making a phone call, we know
who that is, and then it is up to us to decide whether to pick
it up.
I am kind of doing a little filibuster, but I think that is
where my support would lend itself; and I think something could
move on a requirement that commercial calls be listed, and I
think--I would be very optimistic about the success of that,
and I appreciate the hearing.
I learned a lot, and I appreciate the panel's
participation.
Mr. Tauzin. At this point, the right of free speech does
not include the obligation to listen, it is kind of up to you.
The gentleman from Ohio, Mr. Sawyer, is recognized.
Mr. Sawyer. Thank you very much, Mr. Chairman.
At least in H.R. 3100, what we are really talking about is
the ability to know who is calling. In a sense, though, Ms.
Harrington, don't we already have that through the Telephone
Consumer Protection Act in which you promulgate rules requiring
the clear identification of who is making the phone call and on
whose behalf it is being made?
Ms. Harrington. Yes. The Telephone Fraud Abuse and Consumer
Protection Act is the statute that we enforce; the Telephone
Consumer Protection Act is a law that the FCC enforces. Under
the statute that we enforce and the telemarketing sales rule
that we issued to implement that statute, there is a
requirement that in telemarketing, the caller must promptly
identify the calling entity and state the purpose of the call.
Mr. Sawyer. What is the process for investigating alleged
misrepresentation?
Ms. Harrington. Well, the Commission staff has fairly wide
latitude to commence nonpublic investigations and the process
for investigating is a fact-gathering one.
Mr. Sawyer. Is there a difference between the process for
nonprofit, for-profits and political entities?
Ms. Harrington. Well, there is always a question about
whether we have jurisdiction over the subject complained of,
and generally, we would not use our resources to investigate
something over which we have no jurisdiction. We can legally
investigate to determine whether or not we have jurisdiction,
but as a matter of----
Mr. Sawyer. You are suggesting there is a difference,
though, is that right, among the categories?
Ms. Harrington. Oh, yes, yes. Commercial practices,
generally we have jurisdiction over. Telemarketing is defined,
as I have mentioned, in the statute.
Mr. Sawyer. How do you distinguish between a call made by a
commercial, for-profit telemarketer and the party on whose
behalf that call is being made, if it is not--if it does not
fit into one of those specific categories?
Ms. Harrington. Well, generally if the call is made by a
commercial telemarketing company, our position is that we have
jurisdiction. There may be some limitations on that
jurisdiction, though, that we determine further down the road
when we gather more facts.
Mr. Sawyer. But that doesn't preclude you from looking into
that to begin with----
Ms. Harrington. No.
Mr. Sawyer. [continuing] as long as it involves a
commercial entity conducting the campaign?
Ms. Harrington. Right. And as long as there aren't some
other limitations, for example----
Mr. Sawyer. Well, let me ask you, does political speech
shield a commercial entity acting on behalf of a political
entity or a nonprofit?
Ms. Harrington. Well, telemarketing is defined in the
statute that I referred to as including telephone calls that
are made as parts of a plan, program or campaign to sell.
Political speech isn't selling something; political speech is
trying to--is expressing protected--views that are protected--
--
Mr. Sawyer. Well, that is expressing views. What about
solicitation of donations, or the offering of a position in
return for money; when does this stop being speech and start
becoming commerce?
Ms. Harrington. Generally, we have taken the view that
soliciting contributions does not involve sales, but you are
asking a question that really would require investigation and
parsing through facts before we would make some sort of
general----
Mr. Sawyer. Does it shield people from identifying who they
are and whether or not they are calling on behalf of an entity?
It seems to me that is the threshold, the opening threshold.
Ms. Harrington. Well, if the call is not part of a
telemarketing campaign, then the rule doesn't apply.
Mr. Sawyer. Sure. But if it is professional telemarketing,
then presumably it does?
Ms. Harrington. Well, professional telemarketers telemarket
or make calls in connection with programs that aren't part of
what the Congress defined as ``telemarketing''. That is, if I
am calling for one of the charities----
Mr. Sawyer. I am trying to get back to the question of, as
a receiver of a call, whether I have the right to know on whose
behalf the call is being made, particularly when the call is
placed by a commercial telemarketer.
Ms. Harrington. Well, the telemarketing sales rule imposes
an obligation on the caller if the caller is engaged in
commercial sales. So the question about whether that obligation
applies depends on the purpose of the call.
Mr. Sawyer. Mr. Chairman, I am not sure that my time got
turned on, so I am not sure----
Mr. Tauzin. Actually, it didn't get turned on, but we are
monitoring, and you are at about 5 minutes and 30 seconds right
now.
Mr. Sawyer. We will have a second round, won't we?
Mr. Tauzin. If you would like.
Mr. Sawyer. Thank you, sir.
Mr. Tauzin. The Chair recognizes the gentleman from Texas,
Mr. Green.
Mr. Green. Thank you, Mr. Chairman.
Ms. Harrington, is the FTC familiar with the types of
technologies that telemarketers use to circumvent Caller ID
systems or devices?
Ms. Harrington. Our staff is generally familiar and working
hard as we review our telemarketing sales rule to make sure
that our knowledge is completely current, yes.
Mr. Green. Mr. Chairman, I apologize. Could we have the--
there are some other questions I would like to ask and I know
other members might, if we could open the record so that we
could submit questions.
Mr. Tauzin. It is a practice of the committee to hold the
Record for 30 days and to allow members to submit additional
questions in writing to the witnesses, who are requested to
respond within a similar period of time.
Mr. Green. Thank you, Mr. Chairman.
Mr. Tauzin. Without objection.
Mr. Green. Mr. Miller, having served 20 years in the
legislature in Texas, I understand the concern, and in fact, I
mentioned earlier a bill that Congresswoman Wilson and I have
that I picked up the bill from a State rep in Texas on spam,
because there was no way they could do it on a State level.
Is that your same frustration?
Mr. Hatch-Miller. Yes, it is, sir. I see this as
cooperative. We have things that we are doing at the State
level, and I believe if you are doing things at the Federal
level, we could work together and actually make a better
product.
Mr. Green. In working with my State rep, we have actually
been able to put that legislation together, for telemarketing
doesn't recognize State lines any more than spam does. Frankly,
sometimes they don't recognize international boundaries, and
that is something we have to deal with the State Department on,
I guess.
Mr. Brubaker, is your company a member of the Direct
Marketing Association?
Mr. Brubaker. Yes, we are.
Mr. Green. And do you comply with their guidelines, as far
as you know?
Mr. Brubaker. Yes.
Mr. Green. And do you distinguish between your commercial
telemarketing and your political telemarketing?
Mr. Brubaker. Well, certainly there are differences in how
we approach those two different entities.
Mr. Green. But the guidelines are used for your company; so
whether you have a staff member making a call for a product or
a political issue, for example, would you still be under the
guidelines of the Direct Marketing Association?
Mr. Brubaker. Well, we apply the guidelines based upon the
type of call that we are doing.
Mr. Green. Okay. So the guidelines--and I know what the
guidelines are because you are a member of the Direct Marketing
Association. So you distinguish between the type of call on
whether those guidelines apply?
Mr. Brubaker. Well, it depends upon the laws that are in
place for each type of----
Mr. Green. We are not talking about the laws, we are
talking about the guidelines, the Direct Marketing Association
guidelines, because one of the bills we have today would be to
encourage the compliance with those guidelines.
Mr. Brubaker. Sure.
Mr. Green. And since they are voluntary, you don't have to
be a member of the Direct Marketing Association.
Do you agree by being a member, though, to comply with
those guidelines?
Mr. Brubaker. Yes.
Mr. Green. But you are saying that those guidelines in your
company are used, depending on the type of call?
Mr. Brubaker. We enforce the guidelines depending on the
type of call that we are doing. When we are involved in a
commercial sale, there are certain types of issues that we are
responsible for, such as the Telephone Preference Service, and
when we are calling for a nonprofit organization, that
guideline does not apply.
Mr. Green. Okay. So the Direct Marketing Association
guidelines don't apply to nonprofit, to political calls that
you do?
Mr. Brubaker. Depending on exactly which terms we are
talking about, but the Telephone Preference Service list
applies only to sales of products and not to nonprofit
organizations.
Mr. Green. I know it is difficult in the sale of a product,
and I know you had the article there, but if your company
called and offered to a physician, for example, a chance to
join a physicians advisory board in return for a campaign
contribution, those guidelines would not be covered by that
effort, then?
Mr. Brubaker. The Telephone Preference Service would not.
But again, we are calling--if we are calling doctors, that
would be a business and the Telephone Preference Service would
cover consumers, so we are talking about two different things.
Mr. Green. Okay. Well, what I am trying to find out is that
by being a member of the Direct Marketing Association, you
agree to comply with guidelines. One is to identify yourself.
Mr. Brubaker. We agree to comply with the guidelines that
are appropriate for the type of business we are in, absolutely.
Mr. Green. That apply to the type of business, which is a
telemarketer.
Mr. Brubaker. Telemarketing, whether it is a commercial
sale or whether it is requesting donations for a nonprofit
organization; they are two different things.
Mr. Green. So you don't have the same guidelines for
commercial sale----
Mr. Brubaker. Not completely, no.
Mr. Green. If you are calling for a time share or resort
property, or if you called me for the Republican National
Committee or the National Republican Congressional Campaign,
the guidelines would not be used for the Republican
congressional campaigns.
Mr. Brubaker. Those are two separate campaigns. The
Telephone Preference Service--and I am speaking of that
particular guideline, the Telephone Preference Service, meaning
the do-not-call list, would be used for commercial
solicitation.
Mr. Green. Okay. So you do have two separate guidelines
between nonprofit and political calls and commercial calls?
Mr. Brubaker. Correct.
Mr. Green. Although when we cut away everything, you are
still trying to receive money from somebody you are calling; is
that correct?
Mr. Brubaker. Well, I think you have to look at the
campaign and what the client is asking for at that point: Are
we building a relationship and asking for a donation?
Mr. Green. You are considering what the client is asking
for and not necessarily what--because if you call a doctor or a
lawyer or someone--what I am saying is that the whole point is
to receive an amount of money from that person you are calling,
whether it be a doctor, lawyer, school teacher, or anything
else, and whether it is to sell a product, a time-share and a
condo, or a telephone service, or to solicit money from a
nonprofit.
I guess my concern is that I don't want to infringe on free
speech, but I think that as a telephone consumer, when someone
calls from a commercial telemarketer, they ought to be required
to identify what they are doing, because their goal is to
separate me from my money, one way or the other, whether it is
a donation or whatever.
You don't think we ought to have the same guidelines?
Mr. Brubaker. No, there are two different types of calls
being made there.
Mr. Green. Well, I think the person receiving those calls
might think that they are the same type of call, because the
goal is to buy a product or separate them from their money
whether it is $125 or $2,500.
Mr. Tauzin. The time of the gentleman has expired.
The Chair recognizes the gentleman from Illinois, Mr. Rush,
for a round of questions.
Mr. Rush. Thank you, Mr. Chairman. Mr. Chairman, my
understanding is that we are here to talk about telemarketing
abuses; and I believe that--in light of your comments earlier,
Mr. Chairman, I believe that Mr. Brubaker's testimony would be
within the scope of this discussion.
Mr. Tauzin. If the gentleman would yield, you are permitted
to ask him any questions you want. The subject of this hearing
has to do with two bills filed by members of this body, each of
which deals with commercial sales and telemarketing on
telephones.
And let me say it again: This is not an O&I hearing, not a
hearing about the practices of either one of the two political
parties in soliciting funds. Both use telemarketing
extensively; both, I assume, use all kinds of practices in
trying to separate people from their money for political
purposes. I assume that would make a great hearing at some
other committee, but this is not the one for it.
I would urge the gentleman to direct his questions to the
subject of the two bills before the committee.
The gentleman is recognized for 5 minutes.
Mr. Rush. Mr. Chairman, I just want to state that both
bills that we are addressing here contain exemptions for
political action committees, and it would seem that that would
make it within the purview and within the scope of this
discussion to engage in the line of questioning that we have
embarked upon earlier.
Mr. Tauzin. If the gentleman is inquiring again, the Chair
is going to give the gentleman as much leeway as I gave other
members to ask as many questions as he wants to ask these 5
minutes. I would simply admonish my friend, as I admonished all
members of the committee, to keep to the subject of the hearing
which is the two bills before us.
The gentleman is recognized for 5 minutes.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Brubaker, are you a member of two different
telemarketing associations?
Mr. Brubaker. We are members of the ATA, the American
Teleservices Association, as well as the DMA, the Direct
Marketing Association. The Direct Marketing Association covers
various types of direct marketing mediums; telemarketing is one
of those.
Mr. Rush. And you are here representing the----
Mr. Brubaker. I am representing the ATA, as well as my
company, yes.
Mr. Rush. And does the Direct Marketing Association have a
code of ethics?
Mr. Brubaker. Yes, they do.
Mr. Rush. And what about the ATA?
Mr. Brubaker. Yes, the ATA does as well, yes.
Mr. Rush. Can you give us some provisions of that code of
ethics of both, and how would they differ?
Mr. Brubaker. Well, I don't know that they are much
different. The organizations have similar goals, but the ATA,
one of the major concerns is educating our members on how to
comply with the telemarketing sales rule and the Telephone
Consumer Protection Act. So the focus of that is on making
calls for commercial campaigns involving the sale of a product,
and we include in the code of ethics compliance guidelines for
the telemarketing sales rule and the TCPA as well.
Mr. Rush. And does any of the code of ethics for the Direct
Marketing Association, and also the American Teleservices
Association--do they address abuses at all?
Mr. Brubaker. Well, certainly.
Mr. Rush. And do they have any provisions for taking any
corrective action or any punitive action against any member who
engages in abusive practices?
Mr. Brubaker. I don't know exactly how that process would
work. I would have to talk to the board of directors.
Mr. Rush. You don't know whether or not----
Mr. Brubaker. I don't know if a trade association has that
ability or not.
Mr. Rush. There is no way to, in order to deal with anyone
who breached the code of ethics in terms of your association--
--
Mr. Brubaker. That would be something I think we would have
do leave to the board of directors of that association.
Mr. Rush. To your knowledge, has that ever happened?
Mr. Brubaker. I do not know.
Mr. Rush. Do you have any information regarding--if someone
were found to have breached the code of ethics, do you have any
information about what would happen to them?
Mr. Brubaker. I am sorry, I do not have any information on
that.
Mr. Rush. What about self-policing in terms of either
association? Is there any component--is there any ethical----
Mr. Brubaker. The TPA is an educational association, and
their focus is to educate not only their members, but consumers
and the public at large as to what the laws are that are in
place and how companies can comply with those laws. So the main
effort of the ATA is to educate members and educate consumers.
Beyond that, I am not familiar with the additional things that
they do.
Mr. Rush. Now, these two bills that we are discussing
today, both deal with abuses.
Mr. Brubaker. The tone of the bills, as I read them, is to
focus on fraud, but as I go through the bill, there is very
little that would actually stop fraud. We are very much
concerned about fraud, the scamming of senior citizens, or
anyone that is using the telephone to perpetrate a crime. We
believe that law enforcement should take every action possible
to stop that.
But we don't believe that these bills will, in fact,
eliminate fraud; it will simply put additional burden on
legitimate business.
Mr. Rush. It is my understanding that we are also dealing
with abuses of the industry, the telemarketing industry,
particularly as it relates to not identifying itself, or the
companies not identifying themselves when they place a call to
a consumer; is that right?
Mr. Brubaker. Companies like ours and other members that I
am familiar with in the association have never intentionally
chosen not to provide information to consumers on who they are,
or to display Caller ID information in any way like that. The
intent is to never to block Caller ID, as I said.
The issue is that we have not had the technology to this
point to be able to do that. Again, we would be happy to work
with telecommunications providers, common carriers, to work
that kind of thing out. But to this point, we haven't been able
to.
Mr. Rush. Well, there is--again, I want to refer back to
both The Washington Post article and also to the Roll Call
article, because there is almost a full page of documentation
and comments, by both members of your company and also by
consumers that receive calls from your company, where the
members of your company have not identified themselves and what
the purpose of their call is.
Mr. Brubaker. Again, I haven't read the article; I have
been paying attention to the hearing. However, everything that
I read in the paper I don't take as fact either.
Mr. Rush. Mr. Chairman, I want to ask unanimous consent of
the committee, Bart Gordon, one of our colleagues, will not be
present, but he has asked me to introduce into the record a
letter from the Tennessee Regulatory Authority, and I would
like to ask unanimous consent that this be included in the
record.
Mr. Tauzin. Without objection, the letter is admitted into
the record.
[The letter follows:]
Tennessee Regulatory Authority
May 24, 2000
The Honorable Bart Gordon
United State Congress
2201 Rayburn House Office Bldg.
Washington, DC 20515-4206
Dear Representative Gordon: We are writing you requesting your
support for House Bill 3100. This Bill, captioned as the ``Know Your
Caller Act of 2000,'' was introduced by Congressman Frelinghuysen and
is designed to allow consumers to better control telemarketing calls to
their homes. Senator Frist introduced the companion Senate Bill.
All of us have heard the stories from consumers receiving an
annoying telemarketing call during the middle of their family meal.
Many times these consumers call the Tennessee Regulatory Authority
(``TRA'') and ask us to do something to stop these intrusive calls.
Many Tennessee consumers feel that telemarketing calls are an intrusion
on their privacy and have taken steps to control these calls. The
Tennessee General Assembly recognized the importance of this issue last
session when it passed the Do Not Call statute. This statute, among
other things, requires the TRA to initiate and maintain a state do not
call register. As of May 22, 2000, over 340,000 Tennesseans have signed
up to be put on the register.
Another indication of the importance of this issue is the number of
Tennesseans subscribing to the telephone service Caller ID. Over 1.1
million Tennessee homes and businesses have signed up for this service.
Caller ID allows a consumer to see who is calling and grants the option
of rejecting the call. But, Caller ID can only be used as a screening
device to avoid unwanted telemarketing calls if the caller's name and
number is transmitted. Many telemarketers have discovered ways to use
technology to block their name and number from appearing on caller ID
devices thereby diminishing the effectiveness of the service. House
Bill 3100 addresses this problem by prohibiting telemarketers from
actively blocking their name and number from appearing on caller ID
devices.
We believe House Bill 3100 compliments and reinforces the actions
the State's General Assembly has taken to place Tennesseans in more
control of the telemarketing calls they receive. We encourage your
consideration and support of this Bill. Please call us if you wish to
discuss this matter or any issue that you feel we could provide
assistance.
Respectfully submitted,
Melvine Malone
Chairman
Lynn Greer
Director
Sara Kyle
Director
Mr. Tauzin. The gentleman's time has expired.
The Chair will entertain a short second round before we
wrap up. I understand the gentleman, Mr. Sawyer, has a few
questions. Mr. Sawyer is recognized.
Mr. Sawyer. Thank you, Mr. Chairman.
Mr. Brubaker, welcome to the subcommittee.
Mr. Brubaker. Well, we are happy to be here.
Mr. Sawyer. You may have been happier to be at other places
at other times, but I appreciate your response.
We have been talking about DMA and ATA guidelines. Could
you tell us what, under either or both of those guidelines,
what ``identify'' means.
Let me be very direct with you. I am trying to get at what
would misidentify or misrepresent mean?
Mr. Brubaker. ``Identify'' would, in my understanding, mean
representing whatever purpose the call was made for.
Mr. Sawyer. As a matter of general policy, would you feel
compelled, in working for a commercial entity, to identify that
commercial entity, rather than simply to say that you are
InfoCision.
Mr. Brubaker. Absolutely.
Mr. Sawyer. Would you feel the same obligation with regard
to nonprofit to identify the nonprofit?
Mr. Brubaker. Well, when a call is made for a nonprofit,
the issue is to determine what specifically that call is in
reference to. There may be----
Mr. Sawyer. Should I, as the recipient receiving the call--
if I ask who you are calling on behalf of, should I have the
right to know that?
Mr. Brubaker. Sure, when asked, absolutely.
Mr. Sawyer. And I assume the same thing would apply for
virtually any client that you would----
Mr. Brubaker. Any client.
Mr. Sawyer. So let me ask you if failure to disclose, when
asked, would constitute a misrepresentation or a
misidentification; is that correct?
Mr. Brubaker. Depending on the situation, I would have to
look at that.
Mr. Sawyer. Oh.
I am trying to ask these as directly as I can, and at some
point I would hope that you could give me a direct answer.
Mr. Tauzin. Well, if my friend will yield, we have had
problems in this town understanding the meaning of the word
``is'' from time to time. I would suggest that the gentleman is
trying to answer your question as honestly as he can.
The gentleman may proceed.
Mr. Sawyer. That was wonderful testimony, Mr. Chairman.
Thank you.
Mr. Tauzin. You are welcome.
Mr. Sawyer. Frankly, Mr. Brubaker, I am concerned that the
law does not go far enough in asking you to identify who you
are working on behalf of. But I will also tell you that I don't
get the sense from what the Roll Call article says that you
failed to obey the law, if this article is accurate. And I am
not asking you to comment on it, because you can't.
What I am really interested in, as much as anything, is to
give InfoCision the opportunity to characterize--and perhaps
you will have to do this in a subsequent response--to
characterize the circumstances that surround the two articles,
and to tell us what you think is the appropriate response on
behalf of DMA, the ATA and the condition of the law with regard
to identifying not only who is making the call, but on whose
behalf the call is being made.
I am troubled that Infocision's soliciting participation in
the Physicians Advisory Board and asking for a donation of
$300,000 to $500,000, in return for which a physician would get
a certificate to hang on his wall and participation in a New
York Times full page ad, that that becomes a thing of value for
which a payment is being asked. And that, I suspect, is walking
a fine line.
I am not suggesting at this point that you have crossed
that line, but it is a very close approach to a commercial
transaction and one that I hope that in your subsequent
response to these questions you will feel comfortable in
characterizing for me.
Thank you very much.
Thank you, Mr. Chairman.
Mr. Tauzin. I thank the gentleman.
Mr. Rush.
Mr. Rush. Mr. Chairman, I have one additional question.
Mr. Brubaker, you have indicated that--and I heard
testimony from the other panelists, and you have indicated in
response to my previous question about the fraud, particularly
as it relates to senior citizens.
I am somewhat concerned about what has been reported in the
two articles in that a caller called a consumer, got a
secretary on the line, and indicated to that secretary that
this particular individual had been recommended for a national
award. And then--and this person was given a 1-800 number to
call back. And in this instance, the physician called back, and
then at this point in time, he was told that he would get the
award, but only if he was able to pay a certain monetary
amount, and then he would get that award.
Now, in my estimation--and I can see a senior citizen, and
they, in my experience, have certainly--I have become aware of
the senior citizens who would be used in the same kind of
process by unsavory sales persons, telemarketers, some seniors
who have given up titles, deeds to their homes, savings
accounts and very--just other things, with the same kind of
technique being utilized. It seems to me that that is a serious
ethical concern.
My question, still, to you is, do you find that that type
of practice is the subject of any of the code of ethics of
either organization that you belong to?
Mr. Brubaker. I feel strongly that any calls that we have
made at InfoCision are ethical.
Mr. Rush. Even if--if any other company would make those
types of calls, would something be wrong with that?
Mr. Brubaker. I would have to review that campaign
thoroughly to make sure that I understood it before I passed
judgment on it.
Mr. Rush. So you have no opinion, based on the information
I have given you and----
Mr. Brubaker. I really don't have any opinion at this point
because we are talking theoretically, and I would like to look
at something factual.
Mr. Rush. Well, here is an article.
Mr. Tauzin. Well, I thank my friend. Has the gentleman
concluded?
Mr. Rush. Yes, I have.
Mr. Tauzin. Let me just point out, there were some fine
articles printed in the press for years about phone calls made
from the White House and fine distinctions about whether the
phone solicitation occurred at one end or the other. There are
some interesting articles about Buddhist temples. There have
been all kinds of suggestions of improper political practices
and solicitations by both political parties.
This is not a hearing about that issue. I suggest that if
we were to have a hearing about that issue, we would have an
exceptionally well-balanced panel of miscreants from all over
the country who have performed all kinds of improper
solicitations to sneak money away from people for political
purposes.
This is not about that, and the gentleman and my colleagues
again are admonished that this hearing is about two very
serious bills dealing with commercial practices, and there are
some very serious issues dealing with political practices that
both parties need to address at some point, and I suspect that
we are going to continue to address them in the political
context. This is not about that today.
I want to thank the witnesses for--I want to thank the
witnesses for appearing today, and I thank you for your
contributions.
If the gentleman has nothing for the good of the order, the
Chair will recognize him; otherwise, this hearing will stand
adjourned.
Mr. Sawyer. Well, I hope I do. I hope that the Chair will
note that I have taken great care not to mention any political
organizations.
Mr. Tauzin. The Chair would acknowledge that, and I wish to
thank the gentleman from Ohio. I wish that his colleagues had
been so careful.
This hearing stands adjourned.
[Whereupon, at 1:30 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Direct Marketing Association, Inc.
June 13, 2000
The Honorable W.J. ``Billy'' Tauzin, Chair
Subcommittee on Telecommunications, Trade and Consumer Protection
Committee on Commerce
United States House of Representatives
Washington, D.C. 20515
Dear Chairman Tauzin: The Direct Marketing Association (The DMA)
would like to go on record as opposing the two bills on which the
Telecommunications, Trade and Consumer Protection is holding a hearing
on Tuesday, June 13, 2000. The bills are H.R. 3180, titled the
``Telemarketing Victims Protection Act,'' sponsored by Representative
Salmon, and H.R. 3100, sponsored by Representative Frelinghuysen.
Of particular concern is H.R. 3180. The bill directs the Federal
Trade Commission to promulgate regulations that would:
1. Require telephone marketers to notify consumers when called of their
right to be placed on The DMA's ``do-not-call list'' (known as
the Telephone Preference Service (TPS)) or the appropriate
state list. If the consumer asks to be placed on the lists, the
telephone marketer must then inform The DMA or the appropriate
state;
2. Require that all telephone marketers subscribe to The DMA's
Telephone Preference Service;
3. Ban telephone marketing calls between 5:00 p.m. and 7:00 p.m.; and,
4. Forbid telephone marketers from blocking the identity of the
telephone from which they are calling.
The DMA is very proud of its TPS and adheres to the principle
underlying H.R. 3180 that consumers have a right not to be called if
they so desire. However, the bill makes such major changes to the
service and potentially adds such great costs to the administration of
the list that it could jeopardize its very existence.
First, the TPS does not accept names from a third party, such as a
telephone marketing company. The reason is simple. We want to be
assured that the consumer actually wants to be taken off of telephone
lists. We cannot be assured of that if the list comes from a third
party. Acceptance of third party lists could open to TPS to many
abuses, which could be detrimental to both the consumer and to the
telephone marketer.
Second, a requirement that all telephone marketers use the lists
could potentially cost The Direct Marketing Association millions of
dollars. The service is run as a free service and telephone marketers
pay a minimal amount to participate, and there is no provision in the
legislation for reimbursement of expenses. Also, it is unclear whether
telephone marketers who are calling existing customers must also use
the lists. The DMA's own guidelines do not require that existing
customers' names be removed from any telemarketing lists. Clearly, this
provision of the bill should be reconsidered.
Third, the bill could require The DMA to take on considerable legal
liability, again with no reimbursement or legal protection for
conducting what would in essence become a government service.
Fourth, we believe that the ban on calling between 5:00 p.m. and
7:00 p.m. is both arbitrary and unreasonable. It is arbitrary because
it apparently attempts to define America's dinner hour, a very
questionable endeavor, to say the least. It is unreasonable because it
would prohibit calls when it is most likely that people would be home.
It would not be unlike requiring stores to close during the hours that
customers would be most likely to patronize them. The DMA strongly
supported the Telephone Consumer Protection Act that limits calls to
between 8:00 a.m. and 9:00 p.m. We believe those to be reasonable
restrictions.
Fifth, we agree that telephone marketers should not specifically
block the transmission of their caller identification numbers. However,
current technology does not allow the numbers to be transmitted in some
cases. As long as the restriction applies only to specific attempts to
block transmission of the numbers, we have no objection. (See comments
below on H.R. 3100.)
With respect to H.R. 3100, The DMA is also deeply troubled by its
language, which also appears to impose requirements that, to the best
of The DMA's present understanding, exceed the limits of current
technology, and therefore, would place unreasonable burdens on
marketers.
Specifically, the bill would prohibit anyone from interfering with
or circumventing ``the ability of a caller identification service to
access or provide to the recipient of the call the information about
the call . . . that such service is capable of providing.'' Moreover,
the regulations to be promulgated under the legislation would have to
require that telephone solicitations be made ``in a manner such that a
recipient of the solicitation having caller identification service
capable of providing such information will be provided by such service
with'' prescribed information including the name of the person or
entity on whose behalf the solicitation is being made and a telephone
number consumers may contact to make a ``do-not-call request.''
The DMA is concerned that the bill as drafted could be interpreted
not merely to prohibit interference with the display of caller
identification data when the solicitor's telecommunications services,
facilities, or equipment are capable of permitting the display of such
information, but go much farther and require that telephone marketers
upgrade to or otherwise obtain telecommunications services or
facilities that will ensure the display of such information anytime a
consumer has subscribed to a caller identification service. It is our
understanding that, based on technological constraints, neither local
nor long distance telephone common carriers presently make transmission
of originating line information-the calling party's number--available
for certain types of telecommunications services or facilities, such as
the trunk lines that telephone marketers and other large-volume
communications users frequently use. Thus, The DMA must oppose the bill
because it seemingly ignores not only current limits on the technology
available to telephone marketers, but also the potential costs and
burdens they could face in obtaining or providing such technology.
Finally, I would urge you to consider the economic importance of
the teleservices industry to the overall national economy. In 1999, the
teleservices industry was responsible for more than $538 billion worth
of sales and employed more than 5.4 million people. These bills could
impose significant new restrictions that could have far-reaching,
unintended economic consequences. Thank you for the opportunity to
present our views on H.R. 3100 and H.R. 3180. We would be happy to
supply any further information regarding telephone marketers that you
might find useful in your deliberations.
Sincerely,
Richard A. Barton
Senior Vice President, Congressional Relations