Consumer Coalition

The Utility Reform Network (TURN), the Utility Consumers' Action Network (UCAN) and the Commission's Office of Ratepayer Advocates (collectively, the Consumer Coalition, or Coalition) urge the Commission to adopt an allowable error rate of zero, stating that only a zero error rate accomplishes the goals of the legislation. The Consumer Coalition also supports the proposed rules for record keeping, stating that this will aid in enforcement of the mandated prohibition on hang-up calls and will allow telemarketers to self-police their compliance. The Coalition suggests that the scope of the OIR should be broadened to include discussion of a consumer education campaign about the nature of hang-up calls and the prohibition of such calls.

TURN, UCAN and the Privacy Rights Clearinghouse (an affiliate organization of UCAN emphasizing privacy advocacy) were sponsors of AB 870. Through the legislation, they sought an absolute prohibition on the practice of using a predictive dialer to make a telephone connection when no operator or telemarketer is available for the person called. They argue that hang-up calls are not merely an annoyance, but constitute a threat to public safety and intrusion into the privacy and security of one's home.

The Privacy Rights Clearinghouse has received numerous complaints from consumers about abandoned calls. Unfortunately, it is often the case that the consumer doesn't even realize that the calls are coming from telemarketers. Instead, they think they are being harassed, stalked, or perhaps their residence is being scoped by a burglar who is checking if anyone is home. When the director of the PRC makes presentations to the public, she is often asked about "hang-up" calls, especially when she is speaking at senior citizens centers. She has observed that these individuals are often frightened by abandoned calls. When she explains that the vast majority of such calls are generated by the predictive dialing technology of telemarketers, those individuals' fear turns to anger. That fear and anger is the heart of AB 870 and its requirement that abandoned calls be reduced to zero. (Consumer Coalition Comments, at 3-4.)

Arguments by the industry that at least some abandoned calls are necessary and a zero error rate will put the companies out of business or hurt their investment in predictive dialing equipment are hyperbole, according to the Consumer Coalition. The Coalition states that the use of predictive dialing for telemarketing is relatively new, and there was no such concept as "abandoned calls" before predictive dialing. Yet, telemarketers were successful even in those earlier times.

Even using predictive dialers, according to the Consumer Coalition, a telemarketing firm can achieve a zero error rate for abandoned calls. Abandoned calls are a direct result of the algorithms used to set the calling patters. These algorithms can be adjusted to account for the number of operators, length of call, time of day, and so forth. The dialers can be set to call fewer numbers to ensure an operator will be available. Or, the Coalition argues, if the companies want a large amount of "talk time" and a high volume of numbers dialed, they can hire more agents or standby agents to ensure someone will be available to take every call in which a person answers.

The Coalition notes that the industry itself recommends that abandoned calls should be kept as close to 0% as possible, but it also states that in no case should hang-up calls exceed 5% of answered calls per day in any telemarketing campaign. According to the Coalition, a 5% rate would generate millions of abandoned calls. If the Commission adopts anything less stringent than a 0% rate, the Coalition urges that the Commission define hang-up calls carefully. It recommends that the error rate be a percentage of answered (or live) calls, rather than a percentage of all calls made. The error rate also should limit the call delay from the time the consumer answers the phone to when an operator comes on line. The Coalition endorses the industry guideline that the telemarketer should wait not more than one to two seconds, measured from when the consumer's phone goes off-hook, before disconnecting the line if no operator is available.

The Coalition states that even if the Commission sets a zero error rate, consumers will still experience abandoned calls, and enforcement will be difficult. However, the Coalition states, at least those responsible companies that can achieve zero, and recognize it as a good business practice, will reduce the number of abandoned calls overall, and enforcement efforts will further reduce such calls.

The Consumer Coalition states that the proposed record-keeping rules are reasonable and pose no technical difficulty for the industry. The predictive dialing devices include software that is capable of generating the type of information called for in the rules. Record keeping is especially important, according to the Coalition, because of the possibility that telemarketers will block Caller ID information. The Coalition states that this practice exists despite the fact that Pub. Util. Code § 2893(a) prohibits blocking of Caller ID information when the call is being made for telemarketing purposes. If consumers could capture the telemarketer's phone number, even if the call was abandoned, they could call the telemarketer back and ask to be put on its do-not-call list. Without Caller ID information, the Coalition states, the next best thing is for the Commission to obtain the business records of the telemarketer.

In its reply comments, the Consumer Coalition disputes the comments of other parties suggesting that AB 870 requires the Commission to set an error rate greater than zero. They note that subsection (b) of the legislation requires that the Commission "shall determine the error rate, if any, before July 1, 2002." (Emphasis added.) According to the Coalition, this simply means that "the Legislature was skeptical about the appropriateness of any error rate but wanted to give the industry a chance to provide evidence that a higher-than-zero error rate would be `acceptable.'" (Consumer Coalition Reply, at 3.)

The Coalition criticizes those who propose an error rate for abandoned calls of 5%, the industry's standard since 1999 and one that the Coalition argues was rejected by the Legislature. Even a 3% error rate, as suggested by WorldCom, would result in an unacceptable number of abandoned calls, according to the Coalition, and measuring it over a six-month period would weaken the standard by allowing wide fluctuations over a six-month period. The Coalition praises some of the suggestions of Sytel, such as limiting the length of time to two seconds that a consumer is left hanging on the phone before they are either connected to an operator or disconnected. The Consumers Coalition goes on to state:

[T]he Coalition recognizes that the Commission must consider the impact of its actions on both consumers and industry. Therefore, the Coalition would be willing to support a proposal by the Commission for a greater than zero error rate, but only to address concerns regarding the difficulties of establishing an enforcement regime, a phase-in period (if necessary), and the occasional computer glitch. To be acceptable to consumers, however, the error rate should be set at zero with no more than a de minimus amount of departures from this requirement to accommodate these considerations.

The Coalition states that it regards as reasonable the industry guideline suggesting that the consumer should not be placed on hold for longer than two seconds before being connected to an operator or being disconnected. Sytel notes that the United Kingdom standard is one second. Since the industry has offered little evidence to support the limitations of auto dialing equipment, the Coalition believes the Commission should take the minimum amount of time allowed by the industry as a benchmark for reasonableness. It urges that the consumer should be connected to an operator or disconnected within one second of going off-hook, or that call would be considered an error.

The Coalition rejects economic arguments of the industry, contending that telemarketing representatives have offered little evidence that would permit the Commission to do a proper cost/benefit analysis. According to the Coalition, "If, to be profitable, the industry must be allowed to make thousands of abandoned calls per month...and, as the Legislature and industry itself acknowledge, consumers find these abandoned calls offensive, then the industry should possibly rethink its business model." (Consumer Coalition Reply, at 11.)