Do Not Call Register
The objective of the audit was to assess the ACMA's effectiveness in operating, managing and monitoring the Register, including compliance with legislative requirements.
Telemarketing in Australia
1. In response to increasing levels of community concern about the growing number of unsolicited telemarketing calls, the then Australian Government established a national Do Not Call Register (the Register) in May 2007 that enabled individuals to elect not to receive unsolicited telemarketing calls.1
2. Telemarketing can be a cost-effective and legitimate method by which businesses market their products or services. Compared to the more expensive advertising mediums of commercial television, radio, newspapers and magazines, often only a small number of calls need to result in a sale to cover the costs of making them.
3. Telemarketing provides a medium to connect and communicate directly and personally with a prospective customer. Reflecting its increased popularity as a sales method, in the period between 1996 and 2005, employment in call centres grew by 62 per cent from 9400 persons to 15 100; with approximately 1.1 billion telemarketing calls being made from Australia's 30 000 call centres in 2004.2
4. As the prevalence of telemarketing activity increased, so too did the widespread public criticism of some telemarketing practices. Some telemarketing sales techniques can be high-pressure, aggressive or deceptive3, which can confuse or take advantage of the more vulnerable members of the community. Consumers' concerns have principally related to the use of personal information for purposes which they did not intend or provide permission for; and the intrusive and invasive manner of telemarketing, particularly with calls often occurring repeatedly and at inconvenient times.
5. Until 2006, the Australian telemarketing industry was subject to self-regulatory arrangements in the form of a voluntary industry code of practice and a range of Commonwealth and State legislation. The differing regimes resulted in those businesses that conducted telemarketing on a national basis incurring operational complexities and additional costs to comply with the different requirements.4
6. The absence of unified policy and regulation also meant that there was no single avenue for consumer complaints and address by an enforcement authority, and consequently created confusion for both telemarketers and consumers of their respective obligations and rights.
Regulatory response – the Do Not Call Register
7. In response to the uncertainty and criticisms of telemarketing practices, the then Australian Government identified three key policy objectives to be addressed, namely:
- provide a more consistent and efficient operating environment for the telemarketing industry;
- reduce the inconvenience and intrusiveness of telemarketing calls by enabling people to opt-out of receiving those calls; and
- establish an effective complaints handling mechanism to deal with poor telemarketing activities.5
8. Consistent with these policy objectives, the Register was established under the Do Not Call Register Act 2006 (DNCR Act). The DNCR Act allows individuals to opt-out of receiving unsolicited telemarketing calls through listing their fixed-line or mobile phone numbers6 on the Register. There is no charge for listing a number, with each listing remaining on the Register for a period of three years7 unless it is removed by the consumer beforehand.
9. Before conducting a calling campaign telemarketers are required to submit their call lists to the Register for ‘washing' – a process whereby the list is checked against the Register and any matching numbers are identified. Telemarketers create an account with the Register and pay an annual subscription fee for this service, which in aggregate is designed to allow for full cost recovery for the operation of the Register. Figure 1 illustrates the operation of the Register.
Source: ANAO analysis.
10. The prohibition on making unsolicited telemarketing calls to a registered number is wide reaching as it applies to calls that originate from both Australian and offshore telemarketers.8 However, the Register does not aim to prevent all unsolicited calls but instead seeks to regulate the telemarketing industry, and minimise unsolicited sales and marketing calls made to those individuals who have elected not to receive them.
11. Unsolicited telemarketing calls may originate from a range of different sources, including from organisations considered to have a ‘public interest,' rather than those that are commercially driven. When introducing the DNCR Act, it was acknowledged that some consumers would not wish to receive any unsolicited calls, even those made by organisations operating in the public interest. However, it was considered important to strike a balance between allowing specific organisations to undertake socially important work while maintaining the rights of consumers.9 Therefore the DNCR Act provides for certain organisations, such as charities, religious organisations, government bodies and educational institutions, to contact numbers listed on the Register.
12. The model adopted by Australia is also consistent with the international response to rising complaint levels relating to telemarketing practices. For example, the United Kingdom and United States of America both legislated Do Not Call Schemes in 1999 and 2003 respectively.
The Australian Communications and Media Authority
13. The Australian Communications and Media Authority (the ACMA) is a statutory authority within the Broadband, Communications and the Digital Economy portfolio and is Australia's regulator for broadcasting, the Internet, radio communications and telecommunications.
14. As part of its regulatory role, the ACMA is responsible for establishing and oversighting the operation of the Register including compliance and enforcement matters. The ACMA's role in administering and operating the Register differs from the co-regulation arrangements that govern its other regulatory roles. In co-regulation, industry takes a lead role in developing and administering its own arrangements through underpinning codes or standards, with the ACMA providing legislative backing to enable the arrangements to be enforced. Whereas the DNCR Act and associated legislative instruments10 prescribe a regulatory regime that directly and explicitly sets out and imposes the rules that govern the making of telemarketing calls.
15. On this basis, the operational requirements, responsibilities and accountabilities of the ACMA and telemarketers are well defined with the Do Not Call Register Scheme (DNCR Scheme) being relatively simple; reducing the scope for misinterpretation of compliance requirements.
16. The Parliament has also stipulated that it intends for the ACMA, in exercising its powers, to act in a manner that enables public interest considerations to be addressed in a way that does not impose undue financial and administrative burdens on participants in sections of the telemarketing industry.11
17. To allow businesses and emergency service organisations to access the protections provided by the Register, in the 2009–10 Commonwealth Budget the Government announced that the ACMA would receive $4.7 million over four years to widen the scope of the Register from private and domestic telephone numbers, to include all telephone and fax numbers. Legislation was introduced in Parliament in relation to the proposed expansion of the Register in November 2009, and is yet to be passed.
18. The DNCR Act requires a review of the legislation and relevant provisions of the Telecommunications Act 1997 to be conducted before or as soon as possible, after May 2010. The Department of Broadband, Communications and the Digital Economy released a discussion paper for public comment in October 2009, to inform the review. Following the review, a report will be tabled in Parliament.
Audit objective and scope
19. The objective of the audit was to assess the ACMA's effectiveness in operating, managing and monitoring the Register, including compliance with legislative requirements.
20. In conducting the audit and addressing the objective, four key areas were identified for review, namely:
- consumer awareness and access to the Register;
- industry use of the Register;
- compliance and enforcement; and
- contract management and cost recovery arrangements.
21. The audit report examines the Register since its implementation in May 2007. The audit did not review the tender process for selecting the Register operator other than to inform consideration of the contractual arrangements.
22. The Register came into effect on 31 May 2007, from which point it became illegal for non-exempt telemarketers in Australia and overseas to contact a number listed on it. Prior to this, on 1 February 2007, the ACMA contracted Service Stream Solutions Pty Limited (the Register Operator) at a cost of $13.3 million13 to establish, operate, manage and maintain the Register for an initial four year period.14
23. Consumers were able to register their numbers from 3 May 2007 and as at 30 September 2009, 3.83 million numbers were listed on the Register.15 While a number of registration options are available to consumers, the Register website has proved to be by far the most common method, accounting for approximately 83 per cent of registrations. In its first month of operation, the Register achieved the highest number of new registrations, at 1.04 million; with the subsequent monthly number of registrations averaging approximately 100 000. While lower than the Government's initial expectations16, registration levels have been in line with expert advice based on international experience that was commissioned by the ACMA prior to commencement.
24. As the ACMA has contracted a service provider to establish, operate and keep the Register on its behalf, at a day-to-day operational level, the ACMA is more directly involved in: education and awareness raising activities; managing the contract with the Register Operator; administering the cost recovery arrangements; and investigating complaints about possible breaches of the legislation and taking enforcement action where appropriate.
25. Overall, the ACMA has implemented arrangements that effectively support its regulatory oversight of the Register. Registration uptake has met the ACMA's expectations and the promotional and awareness raising activities have been relatively effective in maintaining a high level of consumer awareness and interest in the Register, and developing telemarketers' understanding of the DNCR Scheme.
26. Research conducted by the ACMA indicates that consumers are generally satisfied with the registration process as are telemarketers with the process for submitting call lists for checking (washing) to identify those numbers on the Register.
27. Despite these results, the ACMA's research also shows that the promotional activities have been limited in effectively educating consumers on how the Register and the DNCR Scheme operate. Without an understanding of the types of calls that a registrant may continue to receive, how long it takes for a registration to take effect and the duration of the registration period, there is an increased risk that consumers could make misinformed complaints and be dissatisfied with the effectiveness of the Register in reducing unwanted calls.
28. The Register Operator delivers services direct to the public and hosts and keeps the Register in its technology infrastructure on behalf of the ACMA. Given these arrangements, it is the ACMA's responsibility to remain accountable for all regulatory decisions and ensure that the Register Operator observes values relating to service delivery, such as being fair, effective and impartial.
29. The ACMA has implemented a structured approach to managing the contract with the Register Operator, which is established through clear performance expectations and complemented by a regular regime of reporting and monitoring. As a result, the relationship between the parties is well established. However, the ACMA's monitoring of the contractor's performance is largely reliant on the Register Operator reporting its performance against the contract performance standards correctly as it does not have in place regular processes to independently verify the Register Operator's performance.
30. It remains important that the ACMA has sufficient oversight of the Information Communication and Technology (ICT) arrangements so as to be able to verify the performance of the Register and have confidence in the integrity and security of transactions. The Australian National Audit Office (ANAO) found that the ACMA had limited visibility in some of these areas such as the security standards and requirements as set out in the Protective Security Manual and the Information Security Manual (ISM). As a result, the Register Operator's non-compliance with password requirements for some of the software applications supporting the database has gone unaddressed. Consistent with the ISM, the ACMA in consultation with the Register Operator should perform a risk assessment of the system configuration and implement appropriate technical or manual controls to reduce identified security risks.
Funding and cost recovery arrangements
31. In 2006–07, the ACMA received $33.1 million over four years to establish and maintain the Register. It was anticipated that the net cost would be less than this amount due to the gradual introduction of cost recovery arrangements from the telemarketing industry, with full cost recovery commencing on 1 July 2008.
32. To date the performance of the cost recovery arrangements has resulted in an over-recovery of $0.83 million in 2007–08, and an under-recovery of $0.3 million in 2008–09 against initial estimates. The over-recovery in 2007–08 resulted from the demand for services by industry being significantly greater than the initial modelling. Following consultation with industry, the ACMA determined that the over-recovered fees would be returned to industry evenly over three years through minimising fee increases.
Managing complaints and compliance arrangements
33. Despite a general downward trend in the number of complaints the ACMA has received regarding the receipt of unwanted telemarketing calls, consumers' awareness of how they should make a complaint is low; and the ACMA's data shows that there is a relatively high number of registrants who do not make a complaint when they potentially have a valid reason to do so. Capturing and using complaints that are received presents a valuable resource to the ACMA as they provide the information on which it bases and targets its compliance efforts. It is therefore important that it collects more complete complaint information and that complainants have confidence in the complaint handling process.
34. Consistent with better practice, the ACMA's compliance strategy and tiered monitoring and enforcement model allows it to either escalate action if a company does not respond appropriately to initial regulatory action, or recognise a company for improved compliance performance. While this strategy allows the ACMA flexibility in its approach, it is also important that any actions are transparent to complainants and telemarketers and that the desired flexibility is balanced with minimising the risks of inconsistent decision making which can arise in such a system. The ACMA has implemented a range of controls to treat the risks, however the inclusion of established standards for escalating regulatory actions in enforcement procedures and improving the reporting of compliance enforcement outcomes would provide greater information, transparency and help to build on consumer and industry confidence in the ACMA's enforcement of the DNCR Act.
Effectiveness of the Register
35. The ACMA commissioned research that indicates a majority of the consumers surveyed, who had their number on the Register, received fewer telemarketing calls after registering. Further, the ACMA has recorded the number of complaints, made by registrants who had received telemarketing calls in 2008–09, has reduced by 60 per cent from those received in 2007–08. In the absence of any comprehensive data on the effectiveness of the Register, these results are indicative of the Register's overall performance in reducing the incidence of unwanted calls and improvement in industry compliance.
36. There is little information published on the telemarketing industry and the number of calls made prior to the introduction of the Register, from which a baseline can be derived to measure if there has been a reduction in unwanted calls.17 Since the inception of the Register, the ACMA has surveyed all new registrants to establish how many telemarketing calls they received in the two weeks prior to registering, from which a baseline could be established. More recently the ACMA has requested that registrants using the website channel give their consent to participate in a follow up survey a few months after they register, which will enable them to better measure the Register's effectiveness in reducing unwanted calls.
37. The ongoing success of the Register and the DNCR Scheme relies on consumers and telemarketers understanding how they operate (such as the three year registration period and the complaints and compliance regime) and the limitations (such as they will not prevent all unsolicited calls). A key upcoming test for the ACMA will be when the three year registration period for those approximately 1 million people who registered at commencement, expires in May 2010. To this end, undertaking activities to improve consumers' understanding of the Register and the DNCR Scheme will be important. Further, building on the confidence of consumers and telemarketers in the complaints handling and compliance regime through improved transparency of processes and increased reporting will assist the ACMA in achieving its objectives.
Key findings by Chapter
Consumer awareness and access to the Register (Chapter 2)
38. It is the ACMA's responsibility to promote awareness of the DNCR Scheme as opposed to encouraging people to place their numbers on the Register. The ACMA's research shows that consumers' awareness and interest levels are relatively high and this has been achieved through a broad media campaign that has leveraged off consumers' inherent interest in the Register. However, this approach has been limited in its ability to educate consumers on how the Register and the DNCR Scheme operate.
39. Consumers' understanding of the DNCR Scheme is important to the success of the Register because without an appreciation of the critical aspects (such as the Register is designed to prevent some, not all, unsolicited phone calls), consumers are less likely to consider the Register to be an effective means of reducing unwanted calls. Accordingly, to improve the effectiveness and targeting of promotional activities, the ACMA should implement better monitoring and evaluation procedures; and then use this information to further improve the success of activities in meeting the communications strategy objectives.
40. The mechanisms and arrangements that have been introduced to provide for individuals to register their telephone numbers are accessible, simple to use and able to handle the volume of registrations. A range of controls have been implemented to assure that registrations are made by an eligible person and reduce the potential for erroneous removal of numbers. To improve the effectiveness of the registration process, the ACMA could undertake further work to determine the number of applications that expire without confirmation and the reasons why those applications were unsuccessful.
Industry use of the Register (Chapter 3)
41. Industry access to the Register to enable the washing of calling lists against the numbers registered is well structured. The washing service has performed to the standards expected and most telemarketers have been satisfied with the timeliness of the service. While there is no evidence that the washing service is inaccurate, the washing process is subject to user error, which results in a cost to the telemarketer. Although telemarketers can make an application to the ACMA for the subscription credits related to an invalid washing result to be refunded, there is no information made available to inform telemarketers of this.
42. Security of the Register's transactions, infrastructure and data are being adequately provided by the Register Operator. The integrity of the Register is supported by processing protocols that are designed to record unique and valid numbers. However, it remains important that the ACMA has sufficient oversight of the Register's ICT arrangements to ensure itself that security, integrity and performance standards are being met. In that respect the ANAO identified one area of non-compliance with the ISM that the ACMA had not addressed through a security risk assessment and implementation of appropriate technical or manual controls.
43. As part of the integrity measures being implemented, the ACMA has sought to identify registered numbers that are ineligible and has removed the majority of them. The ACMA has considered additional integrity measures to provide greater assurance over the Register if it is expanded to allow business and fax numbers. On a preliminary cost and benefit assessment, the ACMA does not consider that the mechanism through which it could obtain and confirm telephone account holders' information to address integrity issues, is warranted at this time. Monitoring the bulk registration of business numbers and, if necessary, strengthening verification controls would provide greater assurance over the bulk registration of business numbers.
Industry awareness and compliance (Chapter 4)
44. Telemarketers generally rate their level of awareness and understanding of the DNCR Scheme as high. To engage with industry through resources that meet their needs, the ACMA has recently released a compliance guide that provides practical examples of measures that can improve telemarketers' compliance arrangements.
45. While consumers' general awareness and interest levels in the Register are relatively high, the ACMA's data shows awareness of how they should make a complaint is low; with there being a relatively high number of registrants who do not make a complaint when they potentially have a valid reason to do so.
46. The ACMA's complaint handling process and compliance regime is based on a tiered system of escalation. The ACMA does not undertake to resolve individual complaints or necessarily provide a remedy for all complainants. Instead, it is based on the compilation of complaint information to monitor the level of company compliance, which then informs the appropriate enforcement response. While this approach provides the ACMA flexibility in their approach, it can also reduce the transparency of the process. Therefore, it remains important that clear advice on the compliance monitoring regime and the feedback that will be provided on the complaint outcome, is available to complainants.
47. To further improve transparency and build on public and telemarketer confidence that the ACMA is exercising enforcement action proportionately and consistently, the ACMA would benefit from including minimum standards in its procedures for escalating regulatory action. In addition, improved annual reporting of complaints and compliance enforcement outcomes (such as how many complaints were investigated by the ACMA; how many of those complaints established on reasonable grounds that companies had contravened the DNCR Act; and how many were resolved through compliance enforcement action), would provide greater information and further increase confidence in the ACMA's enforcement of the DNCR Act.
Contract management and cost recovery (Chapter 5)
48. There are cooperative and constructive formal and informal communications between the ACMA and the Register Operator, which in turn contribute to reducing the risks that contract outcomes are not achieved.
49. Contract variations and additional expenditure approvals have provided mixed results in delivering value for money outcomes. Despite some services not necessarily being fully realised, the ACMA has implemented a contractual arrangement with the Register Operator within the original budget estimates. Should the proposed expansion to the Register involve a contract revision to include new services, this provides an opportunity for the ACMA to incorporate a review of the contract performance standards in this process.
50. The annual subscription fees for telemarketers to use the Register have been set to allow costs to be recovered on a user-pays basis. Instituting different fee options has also recognised the variability in use by telemarketers.
51. The telemarketer account creation process was open for some time to misuse by telemarketers due to the lack of validation of company details prior to their accessing of the washing service. As a result, the ACMA has had to write off some telemarketers debts as unrecoverable. To assure telemarketers that the fees and charges they are paying are fair and reflect a user-pays basis, the controls and validation processes over telemarketers account creation have been improved.
The ACMA's response
52. The Australian Communications and Media Authority (ACMA) has appreciated the opportunity to participate in the performance audit of the Register and welcomes the findings and recommendations presented by the ANAO.
53. The Register is a valuable consumer protection mechanism, which has been operating effectively since its commencement in May 2007. This performance audit provides the ACMA with insightful guidance that will further enhance the Register's value to the Australian public and increase the overall effectiveness of the scheme.
54. The ACMA accepts each of the three recommendations contained within the report, and has already commenced work on implementing these matters.
1 Telephone numbers that are eligible for registration must be used or maintained exclusively or primarily for private or domestic purposes.
2 Do Not Call Register Bill 2006 Explanatory Memorandum, Canberra, 2006, p. 3.
3 Telemarketing has been negatively associated with deceptive sales campaigns such as those that offer unexpected prizes or free gifts, which are designed either to obtain someone's personal information or otherwise obtain a financial benefit by disingenuous means.
4 Report of the Taskforce on Reducing Regulatory Burdens on Business, Rethinking Regulation, Canberra, 2006, p. 56.
5 Do Not Call Register Bill 2006 Explanatory Memorandum, op. cit., p. 8.
6 Satellite and Voice over Internet Protocol (VoIP) are also eligible to be registered. However, business and fax numbers are currently ineligible to be registered.
7 At which time an individual may re-list their number on the Register. Consumers can re-register for a new three year period at any time.
8 To address the potential difficulty of imposing Australian requirements on telemarketers who operate from offshore but contact Australian consumers, contractual arrangements for the making of telemarketing calls must ensure that they comply with the DNCR Act.
9 Do Not Call Register Bill 2006 Explanatory Memorandum, op. cit., p. 1, 11, 21, 24.
10 Including the: Do Not Call Register (Consequential Amendments) Act 2006; Telecommunications
Act 1997; Do Not Call Register (Administration and Operation) Determination 2007; Do Not Call Register (Access to Register) Determination 2007; Do Not Call Register (Access Fees) Determination 2009 (No.1); and the Telecommunications (Do Not Call Register) (Telemarketing and Research Calls) Industry Standard 2007.
11 Telecommunications Act 1997, Section 112 (2).
12 Australian Government, Budget 2009–10, Budget Paper No. 2, Part 2: Expense Measures, 2009, available from <http://www.aph.gov.au/budget/2009–10/content/bp2/html/bp2_expense-07.htm> [accessed on 15 July 2009].
13 Due to contract variations the revised value of this contract has increased to $14.5 million.
14 With an option to extend the contract for a period of up to three years.
15 ACMA, Do Not Call Register statistics, available from <http://www.acma.gov.au/WEB/STANDARD/ pc=P%20C%20310882> [accessed on 20 October 2009].
16 It was expected that of the 20 million home and mobile numbers eligible to be placed on the Register that there would be one million registrations in the first week of operation and four million registrations after the first year. Senator the Hon. Helen Coonan (Minister for Communications, Information Technology and the Arts), An End to Nuisance Calls – A National Do Not Call Register, media release, Canberra, 4 April 2008.
17 One industry survey has estimated that over one billion telemarketing calls were made in 2004. The Commercial Economic Advisory Service of Australia, Direct Marketing in Australia, Year ended December 31st 2005, St Leonards, p. 8, 16.