Cold calling is the solicitation of business from potential customers who have had no prior contact with the salesperson conducting the call. [1] [2] It is an attempt to convince potential customers to purchase the salesperson's product or service. Generally, it is an over-the-phone process, making it a form of telemarketing, [3] but can also be done in-person by door-to-door salespeople. Though cold calling can be used as a legitimate business tool, scammers can use cold calling as well.
Cold calling has developed from a form of giving sales pitch using a script [4] into a targeted communication tool. Salespeople call from a list of potential customers that fit certain parameters built to help increase the likelihood of a sale. This modern cold calling, sometimes called "warm calling", tries to "dig deeply to understand" [5] the potential customer.
With the development of newer technology and the Internet, cold calling has gained some criticism. Jeffrey Gitomer wrote in a 2010 article for The Augusta Chronicle that "the return on investment on cold calling is under zero." [6] Gitomer believes that cold calling will only annoy customers and will not attract business. Gitomer also believes that referral marketing is a better form of selling and marketing. [6] According to Gitomer, there are "2.5 basic understandings of a cold call": [7]
Cold calling has also been used by scammers. One such example was when groups of impostors posed as members of the Microsoft support team. The impostors called several homes from a database of Microsoft owners. The Microsoft customers were then told that there was a virus on their computers, and in order to fix it, they had to download a specific program. The program gave access to the computer files for the impostors. [10] Cold calling has been a hallmark in the proliferation of boiler room scams selling fraudulent investment and sports betting schemes from Australia's Gold Coast. [11]
Many countries have rules and regulations that limit and control how, when and whom companies can cold call. These rules and regulations are often implemented by government bodies that deal with telecommunication laws in their specific country.
The United States telecommunication laws are developed and enacted by the Federal Trade Commission (FTC). The FTC aims to "puts consumers in charge of the number of telemarketing calls they get at home". [12] The United States, along with many individual states, have enacted various "Do Not Call" lists. These lists are based on the national US Do Not Call List which was enacted in 2003. [12] Every month, since January 2005, [13] companies are required by law to check the "Do Not Call List" database. They are required to remove the registered numbers from their leads lists. However the "Do Not Call List" has certain limitations. Even if a person is registered for the "Do Not Call List", certain organizations can still call. These organizations include:
The FTC has also set certain regulations on when one can be called. Cold calling can only be done in between 8 a.m. and 9 p.m. The caller is also required by law to tell the customer who they are and what organization they represent. This includes clarifying if the organization is a for-profit organization or charity. The salesperson also must reveal all information about the product they are selling. This means that they are legally required not to lie. [12]
Many other government organizations monitor cold calling within their jurisdiction including the U.S. Securities and Exchange Commission (SEC). The SEC specializes in monitoring cold calling that deals with stocks, specifically stockbrokers. When investing over the phone, the SEC states that written banking information must be given. This means that an investment cannot be made over the phone. [14]
As of February 2024 [update] , the FCC has banned the use of AI-generated voices and potentially AI-generated text messages in telemarketing and cold calling, with violations posing significant legal liabilities for businesses who violate the new regulations set forth. [15] [16]
The National Do Not Call List (DNCL) is administered by the Canadian Radio-television and Telecommunications Commission (CRTC). As with the U.S. version, the rules exclude surveyors, charities, political organizations/candidates, organizations that one has had a business relationship with over the previous 18 months or has otherwise granted permission, as well as newspapers seeking subscribers. [17] [18]
The United Kingdom has its own version of the "Do Not Call List" known as the Telephone Preference Service (TPS). Any citizen of the United Kingdom can register for the list that aims to eliminate its participants from receiving unsolicited calls from organizations including charities and political parties unlike the United States and Canada. TPS was first enacted in 1999 and eventually saw changes in 2003 that ultimately created the Privacy and Electronic Communications (EC Directive) Regulations 2003. [19] While the TPS prevents unsolicited sales and marketing calls, it does not prevent "recorded/automated messages, silent calls, market research, overseas companies, debt collection, scam calls" [20] according to the TPS website.
In 2012, Richard Herman from Middlesex sent an invoice to a company for the time they had kept cold-calling him. He eventually took the company to the small claims court, leading to the company settling out of court. He had been phoned several times by the company despite being listed with the Telephone Preference Service. [21]
Australia has its own version of the "Do Not Call List" known as the Do Not Call Register. The "Do Not Call Register" is under the jurisdiction of the Australian Communications and Media Authority (ACMA) which acts as the supreme telecommunications authority in Australia. Registering for the "Do Not Call Register" prevents telemarketers and fax marketers from contacting registered members. Registration for the program is free and will last for eight years. Similar to other countries, there are exceptions to the "Do Not Call Register". These exceptions include: political parties, charities and educational institutions. The "Do Not Call Register" takes effect 30 days after registration. [22]
In the Republic of Ireland, the "National Directory Database" is an index of numbers that cannot be called for the purposes of 'cold calls' and/or sales and advertising. An unsolicited marketing call to a number on the National Directory Database is a criminal offence. [23]
Some financial products are totally not permitted to cold-call, but the practice is generally permitted within a guideline which requires stating the name of the business, full name of the caller, name of the product and intention of solicitation. There is no do-not-call list. The Japanese government's Financial Services Agency maintains a list of known fraudulent entities involved in financial cold-calling scams. [24]
On May 25, 2018, the European Union passed the General Data Protection Regulation which imposes obligations onto organizations anywhere, so long as they target or collect data related to people in the EU. [25]
Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred to as a "sale".
Telemarketing is a method of direct marketing in which a salesperson solicits prospective customers to buy products, subscriptions or services, either over the phone or through a subsequent face to face or web conferencing appointment scheduled during the call. Telemarketing can also include recorded sales pitches programmed to be played over the phone via automatic dialing.
The National Do Not Call Registry is a database maintained by the United States federal government, listing the telephone numbers of individuals and families who have requested that telemarketers not contact them. Certain callers are required by federal law to respect this request. Separate laws and regulations apply to robocalls in the United States.
Direct marketing is a form of communicating an offer, where organizations communicate directly to a pre-selected customer and supply a method for a direct response. Among practitioners, it is also known as direct response marketing. In contrast to direct marketing, advertising is more of a mass-message nature.
Junk faxes are a form of telemarketing where unsolicited advertisements are sent via fax transmission. Junk faxes are the faxed equivalent of spam or junk mail. Proponents of this advertising medium often use the terms broadcast fax or fax advertising to avoid the negative connotation of the term junk fax. Junk faxes are generally considered to be a nuisance since they waste toner, ink and paper in fax machines.
The National Do Not Call List (DNCL) is a list administered by the Canadian Radio-television and Telecommunications Commission (CRTC) that enables residents of Canada to decide whether or not to receive telemarketing calls. It was first announced by the Government of Canada on 13 December 2004.
Personal selling occurs when a sales representative meets with a potential client for the purpose of transacting a sale. Many sales representatives rely on a sequential sales process that typically includes nine steps. Some sales representatives develop scripts for all or part of the sales process. The sales process can be used in face-to-face encounters and in telemarketing.
The term opt-out refers to several methods by which individuals can avoid receiving unsolicited product or service information. This option is usually associated with direct marketing campaigns such as e-mail marketing or direct mail. A list of those who have opted out is called a Robinson list.
A silent call is a telephone call in which the calling party does not speak when the call is answered. Most such calls are generated by a cold call telemarketing operation's dialer software, which makes many calls automatically and sometimes does not have an agent immediately available to handle an answered call. As a result, the called party hears silence, followed by the call being disconnected. This differs from a ghost call, which is not dialed intentionally, and is due to technical issues or pocket dialing.
The Telephone Preference Service (TPS) is the United Kingdom's official do not call list. It allows businesses and individuals to opt out of unsolicited marketing calls.
Voice broadcasting is a mass communication technique, begun in the 1990s, that broadcasts telephone messages to hundreds or thousands of call recipients at once. This technology has both commercial and community applications. Voice broadcast users can contact targets almost immediately. When used by government authorities, it may be known as an emergency notification system.
Caller ID spoofing is a spoofing attack which causes the telephone network's Caller ID to indicate to the receiver of a call that the originator of the call is a station other than the true originating station. This can lead to a display showing a phone number different from that of the telephone from which the call was placed.
In a reloading scam, a victim is repeatedly approached by con artists, often until "sucked dry". This form of fraud is perpetrated on those more susceptible to pressure after the first losses, perhaps because of hopes to recover money previously invested, perhaps because of inability to say "no" to a con man.
A robocall is a phone call that uses a computerized autodialer to deliver a pre-recorded message, as if from a robot. Robocalls are often associated with political and telemarketing phone campaigns, but can also be used for public service, emergency announcements, or scammers. Multiple businesses and telemarketing companies use auto-dialing software to deliver prerecorded messages to millions of users. Some robocalls use personalized audio messages to simulate an actual personal phone call. The service is also viewed as prone to association with scams.
Telemarketing fraud is fraudulent selling conducted over the telephone. The term is also used for telephone fraud not involving selling.
The Data & Marketing Association formerly, Direct Marketing Association (DMA) is a trade organization for marketers. In 2017, their web site stated, "Yes, 100 years ago we were the Direct Mail Marketing Association and then the Direct Marketing Association. Now we embrace …"
A nuisance call is an unwanted and unsolicited telephone call. Common types of nuisance calls include prank calls, telemarketing calls, and silent calls. Obscene phone calls and other threatening calls are criminal acts in most jurisdictions, particularly when hate crime is involved.
Cramming is a form of fraud in which small charges are added to a bill by a third party without the subscriber's consent, approval, authorization or disclosure. These may be disguised as a tax, some other common fee or a bogus service, and may be several dollars or even just a few cents. The crammer's intent is that the subscriber will overlook and ultimately pay these small charges without challenging their legitimacy or inquiring further.
The Telemarketing and Consumer Fraud and Abuse Prevention Act is a federal law in the United States aimed at protecting consumers from telemarketing deception and abuse. The act is enforced by the Federal Trade Commission. The act expanded controls over telemarketing and gave more control to prescribe rules to the Federal Trade Commission. After the passage of the act, the Federal Trade Commission is required to (1) define and prohibit deceptive telemarketing practices; (2) keep telemarketers from practices a reasonable consumer would see as being coercive or invasions of privacy; (3) set restrictions on the time of day and night that unsolicited calls can be made to consumers; (4) to require the nature of the call to be disclosed at the start of any unsolicited call that is made with the purpose of trying to sell something.
Mass-marketing fraud is a scheme that uses mass-communication media – including telephones, the Internet, mass mailings, television, radio, and personal contact – to contact, solicit, and obtain money, funds, or other items of value from multiple victims in one or more jurisdictions. The frauds where victims part with their money by promising cash, prizes, and services and high returns on investment are part of mass market fraud.