offshore telemarketing

Women’s Electoral Lobby Australia Inc. PO Box 191, CIVIC SQUARE ACT 2608 Web page: http://www.wel.org.au Women’s Electoral Lobby Australia Submission regarding the Proposed Do Not Call Register November 2005 Do Not Call Register Discussion Paper Submissions Department of Communications, Information Technology and the Arts GPO Box 2154 CANBERRA ACT 2601 Contact Dr Hazel Moir hazelmoir@apex.net.au Women's Electoral Lobby WEL Submission regarding the proposed Do Not Call Register Background The Minister for Communications, Information Technology and the Arts, responding to widespread public concerns about telemarketing, issued a discussion paper on a model for a Do Not Call Register in October 2005. Early in November 2005, the Department of Communications, Information Technology and the Arts (DCITA) called for submissions on the proposed model. Market Philosophies and Disciplines A major philosophy of modern governments is a belief in the pre-eminence of market disciplines in allocating scarce resources. Since the early 1980s this view has dominated in high income countries, and has spread to lower income countries, in particular through the actions of the World Bank and the IMF. In high income countries this philosophy has led to a shift away from the mixed economies that dominated in the decades after World War II: in particular publicly owned companies have been privatised. This dominant philosophy is based on the views of the mainstream school of economics known as neo-classical economics, and on a less-well known economic theory, known as public choice theory. Neo-classical economics posits that marketplaces are the most efficient allocative mechanism. The particular claim is based on a comparison with command (ie communist) economies, though this is often forgotten. In the earlier decades after World War II, markets were often subject to at least some degree of regulation, based on the view that national well-being was maximised by constrained market operations but not by untrammelled market operations. The difference allowed for social goals and social values to be taken into account. The idea that pure market mechanisms are the most allocatively efficient possible mechanism is based on rigorous mathematical Women's Electoral Lobby Women's Electoral Lobby Do Not Call Register Submission page 3 demonstrations of outcomes, based on a number of critical assumptions. Among the most critical of these assumptions are that:    no participant in the market holds a dominant position; all buyers and sellers are well-informed about all goods and services on offer; and that all consumers have a given set of tastes (consumption preferences). Clearly none of these conditions operates in many markets today. It is therefore important to be open to the option of intervening in untrammelled market operations in order to improve national well-being. The other economic theory that underlies mainstream political philosophies is public choice theory. This theory, first put forward by Mancur Olson in the early 1970s, holds that where gains from a public policy accrue to a small number of persons, and costs of that policy are widely distributed, it will be easy for potential winners to organise collective action to influence public administrations to introduce the desired policies regardless of the overall welfare outcome (Olson, 1971). According to this theory public decision makers should refrain from action lest they be captured by a small number of vested interests, and are thus tempted into taking action which benefits very few at the cost of very many. Perhaps surprisingly, there are many examples of such capture in the period since market de-regulation became a pre-dominant philosophy.1 In combination these theories have been powerful influences in preventing parliamentarians from taking action to ensure that national wellbeing is maximised. Well-organised lobbyists have successfully promoted the idea that any interference in a marketplace, however it is operating, is wrong. However, when the basic conditions underlying neo-classical economics are not met, then interference in the market place can readily and unambiguously enhance national well-being. The Women's Electoral Lobby (WEL) argues that this is the case in regard to telemarketing. Under neo-classical theory, each consumer decides when and where to participate in the market. This presumption is not met in the case of telemarketing: potential customers 1 One of the most telling is the extension in strength and breadth of protection for ideas (see, for example, Drahos with Braithwaite, 2002, regarding the role of corporate interests in the TRIPS Treaty). One might also think of the many areas where producer interests have prevailed over consumer or worker interests in the shaping of public policy (price transparency in telecommunications and the financial services industries for example; the unwillingness to legislate that parent companies with wholly owned subsidiaries are responsible for the debts and obligations of those subsidiaries if they go into bankruptcy). Women's Electoral Lobby Do Not Call Register Submission page 4 have taken no action to indicate they are ready and willing to participate in a marketplace. They have not opened a newspaper, turned on a television or radio, or physically gone to a marketplace. They are at home. They are not in the market at that time. Further, neo-classical theory holds that all consumers have given tastes and preference. But it is the objective of telemarketers to change tastes and preferences by use of persuasive, rather than simply informative, marketing practices. 2 On this basis it is obvious that constraining the behaviour of telemarketers will enhance national wellbeing and improve market performance. Without constraint, telemarketers will continue to undermine the basic conditions required for effective market performance. DCITA's discussion paper states that there is a need to balance consumer rights with "… the rights of legitimate businesses and organisations to access the community for commercial and non commercial reasons" (DCITA Discussion Paper: 6). WEL does not agree that businesses have any fundamental right to "access the community" where there has not been prior agreement from those people that they wish to be contacted. It is one thing for a company to take actions in the market place. It is quite another for companies to go beyond the market place and interfere in people's homes. As noted above, in the case of telemarketing, the alleged "customer" has in no way agreed to participate in a market at the time they are called. Why women are more affected by telemarketing As women still perform the bulk of domestic tasks, they are more frequently at home, and thus more frequently disrupted by telemarketers. The late afternoon and early evening is a very busy period for households with children: this is an important time for parents to find out how their children's day has gone, children are doing homework, and the evening meal is often a very important time for the whole family to be together. Unfortunately it is at this time that telemarketers most like to intrude. As the Discussion Paper points out, there are many practices of telemarketers that are quite distressing for the elderly, where women predominate. WEL agrees that 2 Indeed it is hard to think of any examples of advertising or marketing these days which does not have a higher persuasive than informative element. Women's Electoral Lobby Do Not Call Register Submission page 5 automated calls, silent calls, recorded messages and predictive dialling are all practices that cause particular stress for the elderly (DCITA Discussion Paper: 18) The Do Not Call Register DCITA's Discussion Paper covers a range of options about how a Do Not Call Register might operate, and provides comparative information about how such registers operate in the UK and the USA. This is valuable information for those of us without the resources of telemarketers and those buying their services. Thank you. WEL notes that the only source of information on the alleged benefits of telemarketing is the Australian Direct Marketing Association, which is an interested party. General Approach WEL would like to commence by strongly supporting a Do Not Call Register backed by the force of law. The current arrangement whereby the Australian Direct Marketing Association operates a self-regulated register clearly does not work. The continued calls for government action clearly demonstrate that this self-regulatory system has been entirely ineffective.3 Legal backing and enforcement is absolutely essential for such a register to be effective. Both the UK and the USA have introduced mandatory systems. Opting In or Out Given the role that markets can play in ensuring national economic well-being is maximised, it is important that they be allowed to operate effectively. As noted above, the behaviour of telemarketers is substantially undermining and perverting the disciplines of the market. Moreover, there has been no choice by the person called to participate in a market. On this basis, the proper presumption for the operation of a national Do Not Call Register is that of opting in, ie a Call Me Register. Unless someone chooses to be disturbed in the peace of their own home, it should not be lawful for anyone marketing anything to interfere with that peace. The idea of a "right to market" is absurd. Certainly people and firms have the right to engage in trade. But such activities are welfare-enhancing for the nation only where they respect existing Women's Electoral Lobby Do Not Call Register Submission page 6 tastes and preferences and do not involve (per)suasion. Any right to engage in trade has traditionally been constrained to market places. Companies should not be allowed to use new technologies to disrupt basic qualities of life, such as the traditional enjoyment of the peace and privacy of one's own home. The DCITA paper notes that "It has been claimed that an opt in approach for Australia could be potentially disastrous for the local telemarketing industry with one commentator remarking that telemarketers would be decimated and many would choose to move offshore if it were adopted" (DCITA Discussion Paper: 11). Support for philosophies which value market mechanisms cannot be taken to the absurd extreme of constituting support for the existence of any type of economic activity. Because marketing has become largely persuasive, it undermines and perverts market disciplines, rather than supporting them. The telemarketing industry has developed recently, and with it a groundswell opposition of the practices on which it is based. Australia is a market-oriented democracy, with values about society and community which, for many ordinary women and men in the community, prevail over values about profit and greed. The whole idea of a Do Not Call Register is to reduce the telemarketing industry to the size supported by those who wish to receive phone calls from marketers. Default options have considerable power and influence, a finding of behavioural economics that has been largely used by business and with respect to superannuation. Choices are strongly shaped by the way in which they are framed, and the setting of a default position is a strong form of framing. Moving from the default option requires action, including finding out about alternatives, and finding out how to change the option. Because many people are unaware of the right to change a default option, or how to make such a change, the inevitable result is that very many people remain with the default option when they would prefer a different outcome. Because telemarketing involves attempting to market to people who are not currently participating in a market, national well-being would be enhanced by choosing a Call Me Register (Opt In approach). This would mean that only those who choose to be constantly in a market receive marketing calls. 3 Indeed, the author of this paper has been on this register for some time, yet still allegedly reputable companies such as Optus and Telstra call for marketing purposes. In response to the comment that one is on the Do Not Call Register the response is "we must have an out-of-date list". Yes, by years! Women's Electoral Lobby Do Not Call Register Submission page 7 Effectively a government decision to introduce an Opt Out Do Not Call Register endorses the right of telemarketers to disrupt people's homes and privacy. It would mean that many people who would prefer not to be called would not be on the Do Not Call Register. Such a decision would provide further proof of public choice theory: that governments are captured by narrow, but well-organised, vested interests and act to protect those interests regardless of national well-being. WEL strongly supports legislatively backed action to deal with telemarketers, and considers that an Opt In approach (a Call Me Register) would be a much more welfare enhancing option for Australians, regardless of the impact on the telemarketing industry. Inclusions / Time Limits The Do Not Call Register should cover all forms of interference by phone, including by facsimile, and text message (SMS). It should also be available to all segments of the community. There is no reason to exclude either small or large businesses. If large businesses are excluded, then the definition should follow that of the current industrial relations Bill: companies employing over 100 persons. Should the Government bow to pressure from telemarketers and the companies using their services and adopt an "Opt Out" approach, there should be no time limit on registration. Any person listing any (or all) phone numbers they pay for should remain on the Register until they ask to be removed. Parents who pay for phones for their children should be able to request that these be on the Register. Children who pay for their own phones should be able to list their numbers on the Register. The Discussion Paper suggests a period of 30 days between receipt of an application and listing on the Register. WEL notes that with an Opt In approach, it would not be necessary to specify any time period. With an Opt Out approach, 30 days seems excessive. New shareholders in media companies are required to obtain witnessed statements of their overall holdings within 14 days. A similar period of time should be sufficient for the Do Not Call Register. Coverage Women's Electoral Lobby Do Not Call Register Submission page 8 WEL considers that the proposed Register should cover all organisations trying to sell anything. It should thus cover charities, religious organisations and political parties as well as commercial businesses. The right to the peaceful enjoyment of one's home should protect one from all organisations selling anything. The International Covenant on Civil and Political Rights, to which Australia is a signatory, provides for freedom of belief. This includes religious beliefs and other beliefs, including political beliefs. Quiet enjoyment of this right is not possible if others are allowed to intrude on one's privacy to try and convert you to their beliefs. With regard to calls initiated offshore, there are different options available depending on whether the party paying for the telemarketing is based in Australia or not. Where the calls are to sell products or services for an Australian based company, the Australian based company should be the target of penalties for any contravention of the Do Not Call Register. For other situations, WEL encourages the government to undertake all actions which would minimise contravention of the Register. Automated calls, silent calls and so-called "predictive diallers" are particularly obnoxious disruptions, cause considerable distress to the elderly, and should be banned in all circumstances, including for those who have Opted In to a Please Call Me Register. WEL questions the validity of so-called "dual purpose calls". If any outcome of the call is an action to purchase something, then it is a marketing call. To refer to such calls as " dual purpose calls" is simply DoubleSpeak. Recorded messages are insulting. If someone wants you to give your time to listen to her/him, then s/he should have the courtesy of also making her/his time directly available. Even if it is the Prime Minister. To expect anyone to drop what they are doing, and answer the phone, to listen to a recorded voice is the height of discourtesy. Exemptions WEL notes here that there is substantial community discontent with the way in which both major political parties have colluded to exempt political parties from key provisions in regard to privacy (especially the intrusive databases that political parties maintain) and other forms of mass marketing, including spam. Women's Electoral Lobby Do Not Call Register Submission page 9 In regard to the list of organisations provided on page 20 of the DCITA Discussion Paper, WEL considers that there should be no exemptions for charities, religious organisations, educational institutions, government bodies, or registered political parties and registered political candidates. Charities are selling things as much as any business. There are more than adequate opportunities for them to raise funds without interfering with one's peace and quiet. Indeed some charities are well known for their intrusive telemarketing practices. Religious organisations are also peddling beliefs or trying to raise money, and similar comments apply – though with greater force because their activities can undermine the human right to freedom of belief. There is no reason why educational institutions should have any exemptions, even for students and alumni. As with the other cases, there are other, less intrusive means of communication. Beyond this, it cannot be assumed that all alumni of an institution wish to be contacted by it.4 Why a government department should need to telemarket daunts the imagination. Certainly the recent trend by both major parties, when holding government, to waste taxpayer money on mass "government" advertising is starting to raise real concerns about waste in the community. They should certainly not be allowed any rights to disturb people in the privacy of their homes. Similar comments apply, with more force, to political parties and political candidates. The paper raises the question of whether individuals or companies with which individuals or small businesses have established business relationships should be allowed to telemarket. The obvious answer is no. The fact that you have bought one thing from a company, does not mean you wish to buy anything else. Many companies make invidious and perverted use of the privacy laws to bundle the right to contact a customer with other aspects of the sale or service. This should certainly not be encouraged. WEL takes issue with the view that there should be a telemarketing exemption as "… it is crucial to the conduct of business to maintain contact with existing customers" (DCITA Discussion Paper: 21). Certainly businesses which look after their customers do better than those that do not; but businesses which disturb their customers by phoning during the evening meal will also quickly lose business. 4 And private educational institutions are businesses. Women's Electoral Lobby Do Not Call Register Submission page 10 Finally the paper raises the issue of social research. For many years the Australian Bureau of Statistics (ABS) has relied heavily on telephone contact to obtain data which essential for effective policy formulation. In this instance the public good from the activity outweighs the private cost of being disturbed at home. Indeed for ordinary women and men to continue to co-operate with ABS collections, it is essential that other disruptions be eliminated so that any ABS call does not suffer from an associated backlash. In regard to other social research, WEL notes that all universities have Ethics Committees which clear all forms of data collection from human beings. These committees presumably consider the intrusiveness of the research design. Because of the public good outcomes from social research, WEL considers such research should not be covered by the proposed Do Not Call Register. Market research and opinion polling are, however, another matter. Prior to the advent of telemarketing, market researchers and opinion pollsters were not seen as much of a bother as the average person was not already overloaded with marketing calls from strangers. As alleged market research is often used as a lead-in to marketing calls,5 for practical purposes it is hard to separate market research and opinion polling from marketing. As a matter of balance WEL would support an exemption for pure market research and/or opinion polling if the Register is based on Opt In principles. If the Register is based on Opt Out principles, many people will be receiving phone calls when they would prefer not to do so. In these circumstances, further limits on market research may well be appropriate. As a compromise, WEL recommends that with an Opt Out system, only agencies that are members of professional associations with appropriate codes of conduct, such as the Australian Market and Social Research Society (AMSRS) be allowed to undertake market research or opinion polling by telephoning people's homes. Administration WEL has no preference between different agents for administration of the Register. What is important is that there be clear operating rules, and an effective enforcement mechanism. There also needs to be good publicly available information on the 5 The author of this submission has, on several occasions, asked telemarketers if they are selling anything, and being told "no, we’re just doing market research". In all cases this has turned out to be false. Women's Electoral Lobby Do Not Call Register Submission page 11 effectiveness of the administration, including public availability of data on complaints. Naturally the Register should be funded by telemarketers. It is they who have created the problem, and so they should pay to fix it. Enforcement It would be preferable for a government body to be responsible for enforcement. Over many decades and many industry sectors, industry bodies have shown that they are far too lenient with regard to infractions of consumer rights. WEL supports the concept of criminality for offences against the Do Not Call Register. Industry has lobbied very successfully for criminal offences for minor breaches of the legislated monopolies called copyright. So what is good for industry should be good for consumers. The administration of enforcement would be simplified if certain breaches were automatically designated as having certain penalties, including fines set at a level to be an effective deterrent. There should be no excuses. If the guidelines are breached they are breached. Innocence or excuses are not an excuse for most misdemeanours and crimes, and they should not be allowed here either. Fees and funding Naturally the full cost of the Register, and all associated costs, should be paid for by telemarketers. They have caused the problem. They should pay to fix it. General telemarketing Issues As is clear from the comments above, WEL believes telemarketing is generally disruptive and perverts effective market disciplines. It targets people who have taken no action to participate in any market. It disrupts privacy and family life, supports excess consumption and unsustainability, and causes needless distress to the elderly. WEL is strongly of the view that the system adopted should be an Opt In system, not an Opt Out system. General telemarketing rules would depend heavily on which model is adopted: Opt In or Opt Out. If an Opt In system is adopted general rules could be much looser. However, with an Opt Out system, it is clear that many people who would prefer not to receive such calls will not have the time or knowledge to get themselves on the Register. Women's Electoral Lobby Do Not Call Register Submission page 12 So under an Opt Out system, strict rules should be adopted. In particular, rules governing the early morning and late afternoon / early evening period should be tight. In the morning households with children operate on very tight schedules. In the afternoon, most schools let pupils out at 3pm, and most mothers, and many fathers, are very busy between then and when the children go to bed. For teenagers, this can be quite late. WEL thus considers that telemarketers should not be allowed to call before 9.30 in the morning or after 3pm during weekdays. In regard to advice as to the company calling, and the company on whose behalf they are calling, it is essential that the marketer be able to provide full information about contact details for both. There should be strong penalties for failure to provide such information.6 Telemarketing calls should also be required to include a clear brief statement at the beginning about what is being sold (products, beliefs, donations etc.). The person being called should then be given space / time to decide to end the call. References Department of Communications, Information Technology and the Arts (2005), Introduction of a Do Not Call Register, Discussion Paper, Canberra, October. Drahos, Peter with Braithwaite, John (2002) Information Feudalism: Who Owns the Knowledge Economy, London: Earthscan. Olson, Mancur (1971) The Logic of Collective Action: Public Goods and the Theory of Groups, Cambridge, Mass.: Harvard University Press. 6 In the author's experience, this information is currently quite difficult to extract, especially names and addresses for lodging complaints.