Skirting the Do Not Call Registry


Time-share operator Bluegreen and other companies have found creative ways around restrictions on telemarketing

As she takes a break from a day of shopping at Atlanta's Perimeter Mall, Bobbie Hill is approached by a rep from a nearby kiosk, who asks if she wants to enter a raffle to win $50,000 or a vacation from time-share operator Bluegreen. Hill readily agrees and fills out an entry form. But minutes later, the 61-year-old is stunned as she belatedly reads the fine print on the entry form: It says that, with her signature, she has agreed to accept phone calls not only from Bluegreen but any of Bluegreen's dozen or so marketing affiliates. Hill, who signed up for the National Do Not Call Registry several years ago just to prevent such intrusions, dashed back to the kiosk and asked her name be taken out of the drawing. "I can't believe they would do that," she laments. "I'll never sign up for anything like that again."

Bluegreen says it has set up hundreds of similar kiosks in malls and other public venues across the country. Between the kiosks and its Internet marketing efforts, the Boca Raton (Fla.) company estimates it rakes in as many as 4.5 million "leads" each year, which it and more than a dozen of its affiliates use for telemarketing. David Bidgood, Bluegreen's senior vice-president of national sales and marketing, takes umbrage at any suggestion that his company is deceiving consumers with the sweepstakes. "We're doing [the sweepstakes] to try and make phone calls," he says. "[The fine print] is there. They should read it, but most people don't."

Ready for telemarketers to start calling in the middle of dinner again? Bluegreen is just one of many companies employing creative tactics to get around the Do Not Call Registry, established in 2003 to give consumers the right to block unsolicited calls from telemarketers. The law was supposed to be a godsend for consumers weary of cold-calling stockbrokers, aluminum-siding salesmen, and fund-raisers. But telemarketers have become increasingly crafty at exploiting loopholes in the legislation, allowing them to conduct business as usual. Marketing firms are using such tactics as sweepstakes, fake opinion polls, and consumer research studies. Some are even posing as politicians and government officials, charities, and other nonprofits that are exempt from the Do Not Call regulations—and then moments later deftly making their sales pitch.

Understating the Issue

The result: The Federal Trade Commission is now receiving more than 3 million annual complaints, up from 579,838 in 2003. Even the 3 million figure likely understates the issue, since many people don't report their problems. "These organizations are all out for their own aggrandizement and don't allow us to eat dinner in peace. They summon us to the phone like Pavlovian dogs responding to the ring of a bell," says Robert Bulmash, president of Private Citizen, a consumer advocacy group founded to fight telemarketers.

For their part, officials at the Federal Trade Commission deem the Do Not Call law a success. They note that only 2.3% of the nearly 150 million registered households filed complaints last year, although the figure has risen from 0.9% in 2004. They are also confident in their ultimate fail-safe: The language in the law that allows consumers to request that specific companies not to call them. Once a consumer makes that request, those telemarketers can't call, no matter what. "Compliance overall by the telemarketing industry is excellent," Lois Greisman, director of the FTC's division of marketing practices. "The Do Not Call list is working."

The FTC has brought action against companies who use tricks to try and skirt the law. According to a civil suit filed by the FTC, from 2003 to 2006, Nevada-based FMFG, a maker of adjustable beds, called 900,000 phone numbers on the registry, telling consumers they were conducting a survey of sleep habits—but in the end tried to sell their product. The FTC suit is still pending. In 2004, the FTC brought a lawsuit against Canada Inc., alleging that its customer service reps posed as government officials who, for a $399 fee, promised to protect the individual from any telemarketing calls. The FTC alleged that the company swindled money out of senior citizens who paid for this protection. Canada Inc. was found guilty by a federal judge in 2005 and ordered to pay $345,000 in penalties.

"Too Many Loopholes" in the Law

Still, consumer advocates aren't impressed. They're particularly incensed by a loophole in the Do Not Call law that allows firms to contact individuals with whom they have an "established business relationship." Such relationships can be established through a purchase, which gives the company an 18-month window to contact the customer. Alternately, marketers can contact consumers for three months after they make an "inquiry," an ill-defined loophole that critics say telemarketers are driving a truck through by way of sweepstakes, raffles, and other deceptive means.

Critics also contend that some marketers set up bogus "affiliates" with other telemarketers just for the purpose of selling and exchanging names and phone numbers among themselves, which is illegal. (For its part, Bluegreen maintains that the affiliates with whom it shares the numbers it gleans from sweepstakes are legitimate, although it declines to identify the other firms.) "The law has too many loopholes, and damages that private citizens can seek are not enough," says Bulmash of Private Citizen.

While some telemarketers seem to be making hay under the current law, the coming year could provide the biggest opportunities yet. That's because consumers who sign up for the Do Not Call Registry only receive protection from unsolicited calls for five years: 2008 marks the year that the first wave of enrollees will lose protection unless they remember to sign up for the registry again. Many consumers aren't even aware that they need to re-register. It looks like many a dinner will be interrupted, once again.

Brian Burnsed is an intern for BusinessWeek based in Atlanta.

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