Opt in? Opt out? Just don't call me, consumers plead

Monday, June 3, 2002

INDIANAPOLIS -- When Jason Settles added his name to Indiana's new "no-call" list, he expected relief from the tyranny of telemarketers.

But the computer consultant's dreams of dinner in peace quickly turned to alarm when he learned his own phone company intended to share details of his calling habits with its corporate affiliates.

Unless customers call a toll-free number to request otherwise, Ameritech plans to share information about what numbers they call, how often they call and how much they pay.

Could telephone offers of Internet, wireless service and other products be far behind? Settles asked.

"From a marketing standpoint, they're taking the path of least resistance -- if you don't do anything, we're going to have the right to use that information," Settles said. "Most people don't ever get around to calling that number."

While insisting they are upholding their legal obligation to protect customers' calling data, many of the nation's biggest phone companies have begun sharing that information with affiliates.

Approach backfired

Verizon, Ameritech parent SBC Communications Inc. and Sprint are among the telecommunications giants using an "opt-out" approach: notifying customers about their data-sharing plans, typically through fliers tucked into phone bills, and assuming customers approve unless they call a toll-free number.

This backfired for Denver-based Qwest Communications International, which withdrew its "opt-out" plans in January after thousands of customers in the West expressed privacy concerns.

Verizon also has responded to consumer resistance, mailing "opt-out" notices to local-service customers in 30 of the 31 states it serves. The exception was Washington, where the mailing was postponed after the Qwest outcry, spokesman Bill Kula said.

The turmoil comes as consumer groups and attorneys general in 38 states are urging federal regulators to reinstate restrictions that required phone companies to employ an "opt-in" approach for sharing customer calling information with affiliates.

The banking industry also is in a long-running fight against information-sharing restrictions, with lobbyists defeating "opt-in" legislation in several states.

"The whole idea that a company can freely market their customers' sensitive or personal information unless a customer expressly tells them not to is troubling to me and should be troubling to anyone who values personal privacy," said Michigan Attorney General Jennifer Grandholm, one of the AGs who wrote the Federal Communications Commission in December to urge an "opt-in" requirement.

In 1999, US West, a former Baby Bell company, challenged the previous "opt-in" requirement as an unconstitutional infringement of commercial speech, and the 10th U.S. Circuit Court of Appeals invalidated the rule.

In response, the FCC is reconsidering regulation of customer calling data. New rules could emerge by year's end, FCC spokesman Michael Balmoris said.

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