InfoCision Fights Calling Rules
For years, InfoCision Management Corp., a for-profit, Ohio-based call center operator, has used an aggressive telemarketing program to help House Republicans harvest new crops of small donors, earning itself millions of dollars in the process.
Now, the company is asking Congress to help it squelch new telemarketing provisions that could hamper its ability to raise funds for nonprofit organizations — work that accounts for 75 percent of the company’s business, according to the NonProfit Times, an industry newsletter.
While the regulations the company is lobbying to overturn would not affect any of its lucrative business with the National Republican Congressional Committee, it does pit the NRCC’s biggest private vendor against provisions of a bill closely identified with President Bush and Congressional Republicans: the USA PATRIOT Act.
It also puts the company in the position of lobbying the very same Congressional leaders for whom it helped to secure a majority.
Chad Bradley, who previously served as deputy chief of staff to Sen. James Inhofe (R-Okla.), confirmed that he is lobbying for the company, but declined to talk specifically about the work he is doing for his new client.
However, according to a lobbying registration form that Bradley recently submitted to the House and Senate, InfoCision is seeking clarification that the Federal Communications Commission — and not the Federal Trade Commission — has jurisdictional authority to regulate telemarketers who work on behalf of nonprofit and political groups. (Bradley’s initial registration form said the company was trying to clarify jurisdiction for the “FEC,” or Federal Election Commission, but in an interview, he said that the FEC reference is a typo that will be corrected soon in an amended filing.)
Telemarketing industry experts familiar with the battle said that such clarification is needed because of a little-noticed provision in the PATRIOT Act that changed the way the FTC treats companies that solicit money for nonprofits, such as InfoCision.
“A Congressional fix may be necessary in light of the way the FTC is interpreting its statutory authority under the PATRIOT Act,” agreed Rita Marie Cain, a professor of business law at the University of Missouri at Kansas City who has written extensively on the topic.
When it passed the PATRIOT Act, Congress expanded the definition of “telemarketing” in the Telemarketing and Consumer Fraud and Abuse Prevention Act to include any telephone-solicitation program conducted to induce a “charitable contribution, donation, or gift of money or any other things of value.”
The PATRIOT Act also amended the TCPA to include the term “fraudulent charitable solicitation.”
These innocuous-sounding changes were drafted after the Sept. 11, 2001, terrorist attacks and were intended to help to crack down on fraudulent charitable solicitations that could be used to support terrorism, according to the legislative record on the topic.
But the FTC’s controversial interpretation of the law — and the agency’s conclusion that it may in fact regulate charitable solicitations that are conducted by telemarketers — has created new headaches for third-party call centers doing work on behalf of charities.
For instance, solicitors for nonprofits are now required to keep a “no call” list to track those individuals who have requested not to receive solicitation calls. These lists are separate from the national “Do Not Call” registry established in 2003, but telemarketing solicitors working for nonprofits are prohibited from calling those consumers for five years.
By contrast, nonprofits that conduct telemarketing on their own behalf, however, are not required to keep such lists.
Other technical requirements in the FTC’s revised telemarketing rules concern the use of automated systems such as so-called predictive dialers and time-of-day restrictions.
“It could definitely lead to problems with the agents who are working on behalf of nonprofits,” said Senny Boone, executive director of the Direct Marketing Association’s Nonprofit Federation.
Steve Brubaker, InfoCision’s senior vice president for Corporate Affairs, did not respond to a request for comment on the matter, but according to prior public statements, it is clear that the company favors the FCC’s more hands-off approach to for-profit telemarketers working for charities.
In recent public communications with the FTC, Brubaker has emphasized the need for the FTC to “harmonize” its regulation of telemarketing practices with the FCC regulations.
“Uniformity of regulation results in reduced costs to the industry that are shared with the consumer public,” Brubaker argued in written comments submitted to the FTC last month. In that instance, InfoCision was providing input on the FTC’s new revisions to its Telemarketing Sales Rules regarding “call abandonment.”
Cain, the professor, said the new restrictions — and in particular the in-house do-not-call list obligation — present a “dichotomy” under the law. She questions whether the FTC’s rules even serve the purpose that Congress intended.
“We know what the statutory intent behind the PATRIOT Act was, and it was not to protect people from getting [unwanted] phone calls at dinner time, but that’s what the FTC has used its additional authority to try to accomplish,” Cain remarked.
She added: “Whether it can be justified, or whether it can be legally upheld — whether the real purpose is being satisfied — is quite another question.”
The question is hardly an irrelevant one for InfoCision, which boasts on its Web site that it raises “more money for Political, Christian and Nonprofit organizations than any other teleservices company in the world.”
The firm works only for conservative causes, and has made a fortune in the process.
In January of this year alone, the NRCC paid InfoCision $2.8 million for fundraising. During the 2004 campaign cycle as a whole, the NRCC paid the group more than $50 million for telemarketing services.
But while InfoCision received a gold medal from the DMA for its 2002 fundraising program for the NRCC — an effort that generated more than $2.5 million in gross revenue for the committee — the firm has also received considerable media scrutiny for the nature and the cost of its fundraising practices.
One of the firm’s popular and effective methods of drawing in new donors — awarding medals to small-business owners and entrepreneurs who contribute to the NRCC — has occasionally embarrassed party officials who have had to explain why adult filmmakers, topless maids and noncitizens were offered such “honors.”
As for the cost, The Washington Post reported that under InfoCision’s contract, the NRCC was promised at least one dollar in donations for every dollar it paid to InfoCision.
Some state regulators have alleged that the company has sometimes swallowed as much as 99 percent of the revenues it collects for charitable clients.
The company has defended its practices by asserting that despite the large overhead costs it passes on to clients, they still end up raising more money than they would have otherwise.
The lobbying effort isn’t InfoCision’s first attempt to get involved in the political process. Its executives made more than $80,000 in political contributions last cycle, mostly to Republican recipients.