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"Dialing for Dollars"--An Op-Ed by Prof. Ian Ayres


(This essay originally appeared in the September 30, 2003, edition of the New York Times.)

Dialing for Dollars
By Ian Ayres, William K. Townsend Professor of Law

The Federal Trade Commission's do-not-call registry, the most popular consumer protection initiative in American history, is in jeopardy. Although President Bush signed the law authorizing the list yesterday, a federal judge last week ruled that it violates the First Amendment because it allows households to block commercial telemarketing calls but not calls from charities, political parties, religious groups or other nonprofit organizations.

Instead of fighting the court's decision, Congress should seize this opportunity to improve the program, which 50 million Americans have already registered for. By allowing households to decide what kind of telemarketing calls they want to receive, Congress can resolve the constitutional difficulty, protect charities, give families better control of their privacy -- and save jobs.

The Supreme Court has already made it clear that government can give people the power to choose which solicitations they allow into their homes. In 1970, the court upheld a statute that allowed a household to block mail from any sender simply by notifying the local postmaster.

Such a system of selective association can easily be accommodated within the trade commission's proposed do-not-call regulations. Under those rules, telemarketers can still call people who have registered for do-not-call status if they have given an express authorization to a "specific seller." Congress could expand the concept of express authorization to include intermediaries, like phone companies, which would then connect the call.

This concept of "authorized intermediation" simplifies the government's regulatory burden. The trade commission doesn't have to decide what types of calls to connect; it can simply leave it to the marketplace to offer the kind of filters that families really want. Families would benefit by having greater control of a scarce resource: their privacy.

Some families would choose to block all calls. Others would agree to accept calls from charities. And still others would take commercial calls if the telemarketer agreed to compensate them for their time.

As things stand, telemarketers are trying to take your time without paying you for it. That's why they call so often. Local phone companies could set up a kind of reverse "900" number system where customers would get paid for each minute they listen to a sales pitch -- in fact, companies have already offered long-distance service based on this model (customers can earn free minutes by, for example, listening to phone sales pitches).

By encouraging compensated calling, Congress could save the jobs of tens of thousands of telemarketers. It would even give telemarketers the opportunity to make new types of calls that would be prohibited under the proposed rules. So long as the sender meets the household's prerequisites, the intermediary should be authorized to connect, say, prerecorded calls or faxes.

Finally, allowing families to choose their telemarketers could also serve the public interest. The current hang-up mentality has wreaked havoc on polling organizations, which now average response rates as low as 15 percent or 20 percent. Under this system, perhaps the response ratio will improve, and we will have more reliable information about public opinion.

With compensated calling, the telemarketing industry will enable its reputable members to continue marketing. For Congress, such a system offers a way out of a constitutional dilemma. Instead of crippling the industry, Congress should embrace a regulation that will rationalize and redeem it.


Ian Ayres, professor at Yale Law School, is co-author of "Why Not? How to Use Everyday Ingenuity to Solve Problems Big and Small."