Telemarketing curbs not a boon to all: the recent federal "do not call" regulations have been cheered by millions of consumers, but they have hurt the telemarketing industry and challenged many traditional businesses that rely on the phone to bring in revenue.

• Author: Sweeney, Paul
• Position: Regulation

Federal "do not call" legislation, targeted to curb the relentlessly annoying solicitations of the telemarketing industry, has been a mixed blessing--a happy event for most consumers but bad news for many legitimate businesses that rely on telephone sales to garner new customers.

True, the legislation has made the dinner hour more peaceful in millions of homes; since the law took effect last October 1, more than 50 million Americans have asked that their names be scrubbed from the list of households eligible to receive such calls. Yet "do not call"--or DNC, as it is known in the industry--is also raising costs for numerous concerns that have relied on the telephone as the time-honored connection with their customers. While consumers often associate telemarketers with aluminum-siding salespeople or telephone service switching, telemarketing is routinely employed by many businesses that consumers hardly view as intrusive.

Indeed, the law applies to more than "telemarketers bugging you to switch your phone service," notes Lynn Wunderman, CEO at I-Behavior, a Harrison, N.Y.-based database marketing firm. Daily newspapers, local merchants and even professionals such as doctors, lawyers and accountants frequently use the phone to recruit and retain customers, patients or clients. Under the new law, however, all are proscribed from calling on people unless they had an existing relationship in the past 18 months.

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The potential impact is large because telemarketing is big business: Americans spent $654 billion purchasing goods and services over the telephone last year, reports Tim Searcy, executive director of the American Teleservices Association. Among other things, consumers responded to solicitations to buy real estate, refinance mortgages, snap up credit card offers, lower insurance premiums and make investments and invest in time-share vacation property.

The industry, moreover, employs 6.5 million people who make calls from 165,000 call centers in the U.S.; many of them already are experiencing disruption of their livelihoods in the wake of DNC rules. On average, several call centers have been closing weekly, reports Joe Sanscrainte, general counsel at Call Compliance Inc., a Glen Cove, N.Y., company that offers TeleBlock, a call-screening and blocking service. Sanscrainte informally keeps track of newspaper stories that report call center closings and reports them on his company's Web site.

"What is really putting...