• by Ken Liebeskind , May 13, 2002

Up until last week, laws restricting telemarketing have primarily involved do-not-call lists, but now there are limits on the use of predictive dialers.

Last week, the California Public Utilities Commission issued a decision that will set the maximum allowable abandonment rate for predictive dialers to three percent as of July 1 and one percent beginning Jan. 1, 2003.

Predictive dialers place calls to consumers through an algorithmic program that tries to match consumers with available operators. But calls often reach consumers when there are no available operators, which produces dead air. The Direct Marketing Association has a guideline that calls for an abandonment rate of five percent or less, but that's too high for California, which set lower levels last week. "We believe that abandoned calls are a nuisance at best and the cause of fearful apprehension at worst," the CPUC's draft decision said.

The bill, which was signed by Gov. Gray Davis, will take effect after it is approved by a commission vote, which is set for June 6.

California is the second state to place a limit on predictive dialers. Kansas has also established a similar limit.

The DMA, of course, is opposed to the rule because it places a new restriction on telemarketing. "We're concerned because the machines allow for the efficiency of call centers," according to DMA spokesman Lou Mastria. "You go from being able to speak for 15 to 20 minutes per hour to 45. The bill limits the ability of the industry to grow."

Errol Copilivitz, senior partner of Copilivitz & Canter, a law firm that represents telemarketing clients, says that a three percent abandonment rate is "workable, but one percent isn't." Predictive dialing "reduces costs that are passed on to consumers and results in savings that are worth being protected," he says.

Copilivitz is unsure whether the California rule will pertain to all telemarketing calls in the state or calls placed from California. "The commission presumes it can regulate calls made by firms outside the state, but we don't know what will happen there. They don't know if they have the authority," he says.

Existing law authorizes the CPUC to control and regulate the use of predictive dialers and specify the hours during which they may not be operated. This bill would prohibit telephone connections for which no agent is available.

While this bill pertains only to California, federal regulations may be next. Currently, neither the Telemarketing Sales Rule nor the Telephone Consumer Protection Act regulate the abandonment rate of predictive dialers. But Copilevitz says the Federal Trade Commission has proposed changes to the telemarketing sales rules, with predictive dialers one of the issues on the agenda. FTC hearings are scheduled for June.