Heed U.S. do-not-call law, firms warned

Canadian telemarketers who work for U.S. clients risk high legal bills, bad publicity, lost business and stiff regulatory penalties if they resist complying with a national do-not-call list south of the border, industry experts warned yesterday. And if there's any doubt that new U.S. rules will affect their businesses, call-centre operators should anticipate similar do-not-call rules to emerge in Canada as the issue gains political momentum leading up to the next federal election.

The Toronto Star
November 21, 2003

Heed U.S. do-not-call law, firms warned
Telemarketers may risk penalties. Similar rules here said matter of time.
Tyler Hamilton

Canadian telemarketers who work for U.S. clients risk high legal bills, bad publicity, lost business and stiff regulatory penalties if they resist complying with a national do-not-call list south of the border, industry experts warned yesterday.

And if there's any doubt that new U.S. rules will affect their businesses, call-centre operators should anticipate similar do-not-call rules to emerge in Canada as the issue gains political momentum leading up to the next federal election.

"Voters want it," said Ian Angus, a telecom consultant and president of Angus TeleManagement Group in Ajax.

"I would expect Canadians will flock to it even more enthusiastically than U.S. callers have."

Do-not-call legislation went into force in the United States Oct. 1, prohibiting telemarketers from calling consumers who have registered their name on a national no-call list.

Politicians and charities are exempt from the rules.

The national law pre-empts, for the most part, existing laws or pending legislation in most U.S. states.

Failure to comply could result in a fine of up to $11,000 (U.S.) for each unlawful telephone pitch.

The Federal Trade Commission and the Federal Communications Commission jointly enforce the rules, which were signed into law in March by U.S. President George W. Bush, who is notoriously pro-business.

For Bush, cracking down on intrusive telemarketers comes down to winning votes.

The list has proven enormously popular with American consumers.

To date, more than 54 million have signed up as many as 1,000 online registrations per second during the first few days alone, causing the sign-up Web site to crash.

About 63,000 breach-of-law complaints were filed in the first month. That, said Angus, could result in nearly $700 million (U.S.) worth of fines.

"The cost of annoying a potential customer has just become very high," said Angus, adding that the cost of non-compliance for Canadian telemarketers goes well beyond fines. "You simply will not get U.S. business and your current U.S. contracts will not be renewed."

That's because most Canadian outbound call centres, to some degree, call U.S. consumers on behalf of U.S. clients, and for many it represents a majority of their business.

According to U.S. rules, liability for any infraction hits the client directly, not necessarily the call-centre operator. Canadian call centres, "must find a way to make sure U.S. business interests are protected," said Rick Frye, vice-president of corporate development with Norwood, Mass.-based Gryphon Networks Corp.

Frye and Angus were participants in a conference call held yesterday by Toronto-based Sprint Canada Inc., which sells telecom services to domestic call-centre operators.

Gryphon sells automated systems that match customer databases with national, state and client-specific no-calls lists and screens out numbers that should not be called. Sprint Canada partnered with Gryphon earlier this month to give its clients a better way to comply with the U.S. law.

Don Bowles, vice-president of regulatory issues at Sprint Canada, said Canadian operators shouldn't fool themselves into thinking they're safe on home soil. "It's clear the U.S. has never been shy about applying their laws extraterritorially," he said.

In addition to fining clients, he said U.S. authorities could seize any U.S. assets owned by a Canadian call centre or even attempt to fine a Canadian telecom provider that's carrying the calls.

"Conceivably, they could go after Canadian company directors travelling to the United States," perhaps denying them entry, Bowles added.

By some estimates, call centres in Canada employ 250,000 people and rake in about $20 billion a year in sales. It has become an important creator of jobs, particularly in Atlantic Canada.

The Canadian Marketing Association manages a voluntary do-not-call list that averaged 5,000 registrations each month. That number soared to 5,000 weekly after the U.S. implemented its list, Angus said.

He said the CMA list isn't enforceable, and political pressure in Canada grows for a mandatory registry backed by tough legislation and strong enforcement. The Canadian Radio-television and Telecommunications has been reviewing the issue for nearly two years and is expected to issue a decision soon.

David Colville, vice-chairman of telecom for the regulator, said to expect a decision "hopefully before the end of the year."

The problem is that regulating telemarketers is beyond the scope of the CRTC's mandate, meaning any calls from the regulator for a Canadian no-call list must be backed by new legislation. As a hot-button issue for Canadians, finding the political will shouldn't be too difficult.

"We're attempting to resolve it the best we can within the framework of the legislation we have to work with," Colville said.


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