Cold calling is the solicitation ofbusiness from potential customers who have had no prior contact with thesalesperson 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 oftelemarketing,[3] but can also be done in-person bydoor-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 givingsales 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 theInternet, cold calling has gained some criticism.Jeffrey Gitomer wrote in a 2010 article forThe Augusta Chronicle that "the return oninvestment on cold calling is under zero."[6] Gitomer believes that cold calling will only annoy customers and will not attract business. Gitomer also believes thatreferral marketing is a better form of selling andmarketing.[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 theMicrosoft 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 ofboiler room scams selling fraudulent investment and sports betting schemes from Australia'sGold 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.
TheUnited States telecommunication laws are developed and enacted by theFederal 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 USDo 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 orcharity. 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 theU.S. Securities and Exchange Commission (SEC). The SEC specializes in monitoring cold calling that deals withstocks, specificallystockbrokers. 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], theFCC has banned the use of AI-generated voices and potentially AI-generated text messages intelemarketing and cold calling, with violations posing significant legal liabilities for businesses who violate the new regulations set forth.[15][16]
TheNational Do Not Call List (DNCL) is administered by theCanadian 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]
TheUnited Kingdom has its own version of the "Do Not Call List" known as theTelephone 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 thePrivacy 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 thesmall 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 theDo Not Call Register. The "Do Not Call Register" is under the jurisdiction of theAustralian 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 theRepublic 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'sFinancial Services Agency maintains a list of known fraudulent entities involved in financial cold-calling scams.[24]
On May 25, 2018, theEuropean Union passed theGeneral Data Protection Regulation which imposes obligations onto organizations anywhere, so long as they target or collect data related to people in the EU.[25]