DAVID FLOREEN
‘A few wrinkles’
Even with recent Federal Trade Commission amendments to the Telemarketing Sales Rule – including the national “Do Not Call” Registry, which went into effect on Jan. 1 – bank officials and members of the mortgage industry say they are not concerned about the potential impact on business.
From Jan. 1 to March 1, Massachusetts residents have the option of calling the Office of Consumer Affairs and Business Regulation or accessing the department’s Web site and registering their phone number on a list that will be distributed to telemarketing agencies around the state.
The idea is to prevent unwanted telemarketing calls to a prospective customer’s home, and while some companies are fearing a decline in business, industry experts in the banking and mortgage sectors say it will not affect business overall.
While the FTC currently does not have jurisdiction over banks, FTC Commissioner Orson Swindle said the commission would go further to protect consumers from unwanted solicitations if allowed to regulate entities such as banks, telephone companies, airlines, insurance companies, credit unions, charities and political campaigns.
But banks in the Bay State are not worried about losing existing customers or potential clients because of the new legislation.
The law took effect on Jan. 1, and according to reports from the Massachusetts Bankers Association, approximately 400,000 Massachusetts consumers have signed up on the Do Not Call list since it became available at the beginning of the year.
David Floreen, senior vice president of the MBA, said the association was generally supportive of the legislation so long as it did not interfere with a bank’s two top priorities: maintaining the ability to call an existing customer and contacting a customer on an outstanding situation or obligation.
Floreen said the law, as written, preserves those business practices with “a few wrinkles” but said banks associated with the MBA were comfortable with the legislation and “a banker’s ability to contact a customer on an outstanding situation or obligation was never really an issue.”
Potential Loss
The mortgage industry also faces challenges with the new database of Do Not Call customers. According to Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, mortgage companies will find other marketing outlets in which to increase business during the decline of telemarketing.
“For those [companies] who do regular telemarketing as a mortgage company, there will be a degree of inconvenience and potential business loss, which will more than likely increase the traffic of phone and e-mail direct marketing,” said Cuff.
Kevin W. Reilly, vice president of Consolidated Mortgage in Quincy, said while there is a potential business loss for some companies, most customers on the list would not fit the potential new client profile.
“One thing that I do favor about this [Do Not Call] list is that the people who do end up registering are not the type of consumers who would be given an application over the phone anyway,” said Reilly. “The people that register do not want to be bothered with telemarketing calls, vs. those people who feel there is a product or service out there to fit their needs and accept telemarketing calls.”
While some mortgage companies still rely heavily on telemarketing and mail solicitations, the Internet has become the marketing tool of preference. And as more companies take their business online, the need for telemarketing dwindles.
Stephen Tomaselli, president and co-founder of Loansnap.com, an online mortgage lender company based in Massachusetts that serves New England states, said companies that have relied heavily on telemarketing will sense a decline in their business climate but companies with expanded channels of marketing will not feel quite the same effect.
“It will not affect much of [Loansnap.com’s] business … We have multiple channels of generating business including the Internet, personal relationships and referrals,” said Tomaselli.
Reilly said Consolidated Mortgage uses an outside telemarketing company to call customers on behalf of the mortgage company, but said he believes telemarketing has “reached its peak and at this point in time, most mortgage companies won’t be affected.”
Cuff said he believes the biggest impact will be felt by banks that “have developed personal relationships with customers stretching over generations.”
However, the impact of the legislation in the banking industry has only one obvious issue, according to Floreen: If you violate the law, you will pay the penalties.
“Banks will obtain the [Do Not Call] list quarterly and pay a fee for the list,” said Floreen. “In the process of developing their profiles of who they want to call, they will have to match those profiles against the Do Not Call list – there are fines and penalties if you violate [the law].”
But with any piece of legislation, there is always a stipulation.
Floreen explained that customers are not only part of the checking or savings account section of the bank, but also the mortgage, investments and brokerage company of that bank, if available.
“If you’re a customer of the bank, you are a customer of the affiliation or corporate family,” said Floreen, alluding to the fact that those individuals might still receive telemarketing calls.
The Do Not Call statute and its provisions vary from state to state, and Floreen said the MBA has no information on the percentage of members currently using telemarketing to contact potential or existing clients on a regular basis.
Since banks are not covered under the FTC jurisdiction, Floreen believes there will come a time when legislation will be mandatory, and even though some banks do not telemarket, he said that “banks will see pressure over time to come up with uniform statutes nationwide.”
