Marketing Privacy

Marketing Privacy:

A Solution for the Blight of Telemarketing

(and Spam and Junk Mail)

Ian Ayres* and Matthew Funk**

Abstract. Unsolicited solicitations in the form of telemarketing calls, email spam and junk mail impose in aggregate a substantial negative externality on society. Telemarketers don’t bear the full costs of their marketing because they do not compensate recipients for the hassle of, say, being interrupted during dinner. Current regulatory responses that give consumers the all-or-nothing option of registering on the internet to block all unsolicited telemarketing calls are needlessly both over- and under-inclusive. A better solution is to allow individual consumers to choose the price per minute they would like to receive as compensation for listening to telemarketing calls. Such a “name your own price” mechanism could be easily implemented by crediting consumers’ phone bills (a method analogous to the current debits to bill from 1-900 calls).

Under this rule, consumers are presumptively made better off by a regime that gives them greater freedom. Telemarketing firms facing higher costs of communication are likely to better screen potential contacts to find consumers who are more likely to be interested in their solicitation. Consumers having the option of choosing an intermediate price will receive fewer calls, which will be more tailored to their interests and will be compensated for those calls they do receive.

But giving consumers the right to be compensated may also benefit some telemarketers. Once consumers are voluntarily opting to receive telemarketing calls (in return for tailored compensation), it becomes possible to deregulate the telemarketers – lifting current restrictions on the time (no night time calls) and manner (no recorded calls). For example, if the prohibition against tape-recorded messages were repealed, we could imagine local grocery stores or movie theaters using the telephone to provide consumers with...