DMA Calls It Quits On Do-Not-Call, Drops Legal Challenge

The Direct Marketing Association hoisted the white flag yesterday in their skirmish against the Federal Trade Commission's National Do Not Call Registry. But legal experts and marketers alike emphasized that the organization's withdrawal by no means ends the battle to reverse the federal appellate court ruling that upheld the list.

Indeed, hours after the DMA issued a press release announcing its decision, the American Teleservices Association promised to continue the fight against the Do Not Call Registry by seeking Supreme Court review of the appellate decision. "We believe that the rights to free speech are being unduly trampled under the guise of consumer protection, and now we'll take our appeal to the highest level," said ATA Executive Director Tim Searcy in a statement.

What surprised onlookers most was the lack of a unified front presented by the DMA and the ATA, the nation's two biggest telemarketing boosters. "I'm surprised that there wasn't more coordination," said Foley & Lardner senior counsel Andy Serwin, who specializes in telemarketing and privacy issues. "It seems unusual for the DMA to do it this way. I guess what they're saying is essentially 'our members don't call these people anyway, so there's no reason for us to fight the fight.'"

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Privacy Rights Clearinghouse Communications Director Jordana Beebe agreed that the DMA had little to gain by continuing the fight against the registry. "When you think about it, the DMA has kept its feet in both ponds," she noted. "For years they've had their own internal registry, so it's not like they weren't aware what consumers think about this. On the other hand, they have an obligation to represent all their members, and supporting telemarketing is a part of that."

The DMA, for its part, referred reporters seeking comment to the press release it issued. In it, the group pledged to work with the FTC to "correct the problems that arose during the registry's implementation." Among the issues that are likely high on the DMA's list: the lack of safeguards to ensure that people don't sign others up for the list without their knowledge.

For instance, there's nothing in the registry rules to prevent company A in a given business from placing all of its customers on the do-not-call list, thus restricting companies B, C, and D in that same business from calling those customers. Following the registry's implementation, the DMA sheepishly acknowledged that the home phone number of senior vice president Jerry Cerasale found its way onto the do-not-call list without his permission.

As for marketers hoping to reach customers via telemarketing campaigns, Serwin said that the registry's current state of legal limbo could force them to make some tough choices. "Some will have to make a decision as to whether they want to comply with the law or not comply with it in the hope that it will be reversed. It's basically an exercise in risk assessment," he explained. "I'd guess that most companies probably have better things to do and are looking at ways to comply, whether they agree with it or not."

Beebe, however, expressed some surprise that companies engaging in telemarketing haven't embraced the registry. "Most of them are happy to have a certain return rate from cold calls--if you get a 2 or 3 percent response, that's pretty good," she says. "By eliminating those consumers who don't want your calls, you're probably going to get a better response rate. You may be narrowing the pool, but what's the point in having a big pool if 98 of 100 people in it want nothing to do with you?"

The Do Not Call Registry was deemed unconstitutional by the U.S. District Court of Colorado in September, which said that it violated free speech protections by allowing phone calls from charities and political groups, but not businesses. This ruling was reversed in February, when the 10th Circuit Court of Appeals in Denver said the list did not pose unreasonable restrictions on commercial speech. "Just as a consumer can avoid door-to-door peddlers by placing a 'no solicitation' sign in his or her front yard, the do-not-call registry lets consumers avoid unwanted sales pitches that invade the home via telephone," the court wrote. Legally, the next step is for ATA to seek review by the U.S. Supreme Court.

One thing is clear: consumers have made their preferences quite clear when it comes to telemarketing. "By pursuing this, [direct marketers] are just continuing to vilify telemarketing in the eyes of consumers," Beebe adds. "I'd say there's some risk involved in that."

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