In this ever-changing world of privacy regulation and legislation, many in the insurance industry are left wondering, ‘Where do I fit in?’ There are a number of insurance agencies that use telemarketing to generate personal lines leads, either by in-house methods or through outside telemarketing firms.
Any agency involved in, or considering telemarketing, and or ‘x-dating’ in order to increase personal lines sales needs to understand Do-Not-Call (DNC) legislation. And unlike state DNC laws, the federal DNC has to be purchased by the selling entity, which may include the insurance agent or broker.
In 1991, Congress enacted the Telephone Consumer Protection Act (TCPA) in response to the unregulated autodialing technology, which emerged in the late ’80s. Autodialing allows the user to load a high volume of phone numbers that are then called or faxed in sequence. Because of its efficiency and low overhead, the new technology quickly became a widely used method for generating leads for businesses.
However, problems soon developed when dialers mistakenly contacted emergency numbers such as those connected to hospital operating rooms.
This resulted in the formation of the TCPA, which restricts unsolicited advertisements transmitted by phone or fax machine. The act prohibits autodialed calls to emergency telephone lines, healthcare facilities, paging services, cellular telephones, and any service for which the party is charged a fee for the call. In addition to these restrictions, the TCPA bars the use of recorded messages or unsolicited faxes to consumers unless prior permission has been obtained or there is an emergency.
The rules of the TCPA were actually implemented in 1992. The new policy included restrictions targeted at reducing the number of hang-ups and dead-air calls experienced by consumers.
Also, the act imposed identification requirements on companies, which prohibit them from blocking their caller I.D. In addition to the Federal Communications Commission’s (FCC) TCPA, the Federal Trade Commission (FTC) implemented the Telemarketing Sales Rules (TSR) in 1995. The FCC recently amended the TCPA in order bring
the two rules more in line with one another.
Until a few weeks ago, the rules banned unsolicited faxing without the written permission of the recipient. The new DNC regulation also required that outbound telemarketing companies adopt a “do-not-call” policy, in which the names of consumers who have requested that the company not contact them are listed.
In June 2003, the FCC, in association with the FTC, further revised the TCPA and TSR requirements, establishing a national do-not-call registry that impacts all telemarketing companies, or businesses conducting telemarketing efforts, with the exception of some non-profit organizations. Unlike state DNC laws, the federal DNC list has to be purchased by the selling entity, which may include the insurance agent or broker. Additionally, if a carrier purchases the list in order to conduct a campaign and is distributing leads to agents, then the carrier is the purchasing entity.
Consumers need only make one phone call or access the FCC’s DNC Registry Web site to have their phone number added to the registry. The federal law supercedes all less restrictive state laws. However, states may have more restrictive laws governing intrastate calling.
The FTC also maintains a Web site (www.telemarketing.donotcall.gov) that allows sellers and the organizations calling on behalf of them to register and purchase the DNC list. Fortunately, the process is quite simple. Sellers must register and acquire a Subscription Account Number (SAN) that is used to download the DNC list.
Registration fees are determined by the number of area codes a seller downloads. The first five area codes are free; thereafter, the seller incurs a $25 charge per area code, not to exceed a maximum of $7,200. If using telemarketing services, sellers need to provide vendors with their SAN in order for the vendor to comply with list suppression requirements on behalf of the insurance agency or carrier. Each seller must acquire a DNC list.
The latest developments occurred on Sept. 23, 2003. A federal judge in Oklahoma ruled that the FTC does not have the authority to enforce a national do-not-call registry. This ruling nullifies the clause in the amended Telemarketing Sales Rule (TSR) as it applies to the National Do-Not-Call Registry. The edict did not, however, render the other provisions invalid. Subsequently, on Sept. 25 the federal court in Colorado ruled that, under the First Amendment, the FTC’s execution of the National Do-Not-Call Registry under the amended Telemarketing Sales Rule is unconstitutional.
The following is an excerpt from the Colorado Federal Court ruling:
Were the do-not-call registry to apply without regard to the content of the speech, or to leave autonomy in the hands of the individual, as in Rowan, it might be a different matter. As the Amended Rules are currently formulated, however, the FTC has chosen to entangle itself too much in the consumer’s decision by manipulating consumer choice and favoring speech by charities over commercial speech.
As a result, the FTC Web site closed for several days, creating further confusion since the FCC maintained that it would continue to enforce the National DNC rules.
On Oct. 7, the Colorado U.S. Court of Appeals stayed the lower court’s decision to suspend the FTC implementation of the National DNC Registry. The registry is presently active at least until the Appellate Court develops its final ruling on the case.
The Appellate Court’s current opinion is “the public does have strong privacy and expectation interests that weigh in favor of granting this stay pending review of merits.” It appears as though the judges are leaning toward the FTC.
As mentioned earlier, the FCC recently amended its rules to coincide with the FTC’s guidelines. This move coupled with Congress’ granting authority to the FTC to implement a do-not-call list strongly indicates that the National Do-Not-Call Registry will ultimately come to fruition. The chairman of the FTC and the congressmen who backed the FTC on the Do-Not-Call legislation, plan to challenge the ruling. There could, however, be a delay of one to six months, depending on whether or not the final ruling states that the FCC must implement the National Do-Not-Call Registry independent of FTC participation.
Businesses not already in compliance with the FCC rules should immediately take steps to do so. The FCC’s Safe Harbor provision states that employee training is a key aspect in achieving compliance. The Safe Harbor provision indicates:
Consistent with the FTC, we conclude that a seller will not be liable for violating the national do-not-call rules if it can demonstrate that, as part of the seller’s or telemarketer’s routine business practice:
• It has established and implemented written procedures to comply with the do-not-call rules;
• It has trained its personnel, and any entity assisting in its compliance, in the procedures established pursuant to the do-not-call rules;
• The seller, or telemarketer acting on behalf of the seller, has maintained and recorded a list of telephone numbers the seller may not contact;
• The seller or telemarketer uses a process to prevent telemarketing to any telephone number on any list pursuant to the do-not-call registry obtained from the administrator of the registry no more than three months prior to the date any call is made, and maintains records documenting the process; and any subsequent call otherwise violating the do-not-call rules is the result of error. (www.diversemarketinggroup.net, Aug. 2003)
It is my opinion that the National Do-Not-Call Registry injures the economy. Experts predict that the telemarketing industry and businesses using telemarketing efforts could lose as much as $50 billion per year. Regardless of ones thoughts and views, the implementation of a do-not-call registry appears inevitable and the penalties for non-compliance will be an exorbitant fine of $11,000 per name on the list that is called.
Larry Neilson is the co-founder and CEO of National Marketing Services and programbusiness.com. National Marketing Services provides telemarketing and database management services to the property and casualty industry. Programbusiness.com capitalizes on the database strengths of National Marketing in order to facilitate relationships between retail agents and the specialty market.