FEDERAL BILL, FTC REGS ON TELEMARKETING EXEMPT RELIGIOUS CHARITIES

It's dinner time and you are sitting down after work, perhaps with
friends and family, for an evening meal.

Suddenly, the phone rings.

Someone is trying to sell you time-shares on a condo, or entice you
with offers of a "free" vacation or some other scheme that may or may
not be legitimate.

Help may be on the way for those of us fed up with the annoying phone
calls that usually seem to interrupt those precious moments of free
time. On Wednesday, the Federal Trade Commission announced plans to
create a nationwide "do not call" list or DNC that would allow private
individuals to have their numbers listed as off limits to aggressive
and sometimes fraudulent telemarketers. Those running the telephone
"boiler rooms," or the more technologically savvy automated dialers
and recorders would be required to check names every three months.
Penalties could run up to $11,000 for every person signed up on the
"do not call" list if they received an unwarranted telephone
solicitation.

The number of telemarketing calls has grown to over 100 million each
day according to a recent article in the Atlanta Journal Constitution
news paper. Much of the increase comes from growing use of
computerized dialing systems. Calls are funneled to "boiler rooms"
staffed by live pitch-men, or to automated announcement devices. The
latter sometimes make it difficult for residents to inform the
telemarketers that they wish to be placed on a DNC list in those
states such as New York which have such a system in place.

But even the new proposed FTC guidelines, and a bill introduced this
week on Capitol Hill to put the brakes on unsolicited telemarketing
calls, provide constitutionally suspect exemptions for a number of
activities including fund raising and other appeals from churches and
"religious charities."

Is this yet another example of a special "carve out" for religious
groups soliciting donations, or pressuring the public to attend
worship services? And as scams and fraudulent schemes in the name of
religion proliferate, does the exemption open up new territory for
unethical telemarketers?

A Religious "Shield"

Government conducts little supervision over solicitations for money by
churches and other religious organizations, including the area of
telemarketing.

Houses of worship once restricted their fund-raising efforts to
literally passing a collection plate during services, or using direct
mail to congregants. That has changed, however, especially with the
rise of so-called "para-church" organizations which are religious in
nature, but operate across traditional denominational lines. As
A.H.Barbee noted in the "Freedom Writer" magazine for May/June 1997,
"Unlike local churches whose spiritual leaders are generalists
(ministers who preach sermons, visit the sick, perform wedding and
conduct funerals), para-church leaders are typically miles removed
from even their most dedicated followers who see them as specialists
in ministry, with near celebrity status." It is para-church outreaches
that seem most aggressive in using media such as television and radio,
direct mail, the internet and telephone solicitation.

The para-churches are functional ministries in that they operate under
the IRS codes for nonprofit groups. They frequently obtain further
legal empowerment through Section 170 of the Internal Revenue Code.
While secular nonprofit groups must report income and other activities
through a public-record Form 990, any religious ministry can be exempt
from even this requirement.

Often lacking roots in local communities, the para-church movement has
aggressively adopted fund-raising techniques including telemarketing.
It is estimated that fraud from telephone-based scams costs Americans
upwards of $40 billion to $60 billion annually. It is not known how
much of this is generated by deceptive churches and other houses of
worship playing fast-and-lose with money, or religion-based
profiteers. What IS known, however, is that many popular para-church
and other religious ministries do not even comply with voluntary
programs such as Ministry Watch which urges what it terms
"transparency" among its members.

A number of religious groups do submit financial information to
Ministry Watch and, in theory, comply with the organization's fiscal
accountability standards. This is then used to verify
contributions and other incomes, revealing a significant cash flow
through major ministries like World Vision, Inc. ($528 million);
Campus Crusade for Christ ($373 million); Trinity Broadcasting Network
($177 million); The Billy Graham Evangelistic Association ($125
million); and Focus on the Family ($121 million).

Other ministries do not reveal their income, however, and receive
poor marks for donation accountability and fiscal standards based on
the Ministry Watch guidelines. Among those receiving a grade of "F"
for concealing their financial operations are Benny Hinn Ministries;
Bible Broadcasting Network; Churches of Christ Disaster Relief Effort,
Inc.; Crystal Cathedral Ministries; Joy of Jesus, Inc.; Jubilee
Network; Kenneth Copeland Ministries; Kenneth Hagin Ministries;
Lutheran Hour Ministries; March for Jesus, USA; Maranatha Volunteers
International; TD Jakes Ministries; and Trinity Forum, Inc.

Telemarketing-For-God; High Pressure, High Tech

Usually, non-profit religious groups hire a for-profit firm to "work"
lists of telephone numbers. The list can be assembled from rosters of
donors who have contributed to previous fund-raising drives, or given
money to other ministries. These lists are often sold or traded on a
per-name basis. Only part of the money generated by the telemarketers
ever reaches the client, whether it is a local church or a parachurch
ministry. Barbee noted that the primary goals of the telemarketers
consist of four steps, from making the initial contact to reciting a
script, collecting money through a credit card, and then taking a
"cut" of the receipts.

"Religious telefunding often uses prayer as a gimmick to get money
from respondents," wrote Barbee. He cites the case of a "major
telemarketing firm" which operates an entire corporate division for
religious clients and employs over 1,000 persons as "communicators."

"While the firm defines prayer as a religious function, it views
prayer as a tool of the fundraising trade, on the level with a
salesperson's spiel presented in a pleasant and courteous manner with
customers."

Religious groups and telemarketers can also employ a more high-tech
approach. The "Octopus Auto Dialer" is advertised as a "multiple line
hardware and software" package that includes "lead generation, voice
mail, phone tree dialing and interactive voice response (IVR)
applications." The manufacturer, Talking Technology International,
says that the device is suitable for everything from political
campaigns and government agencies to automated ordering systems,
"churches & synagogues," "telemarketers" and "debt collection."

Religious groups are using everything from automated dialers to
old-fashioned human solicitation to sell products, contact
parishioners, and even try to recruit new members to their
congregations through "cold calling," which involves essentially
trying to talk about religion to any person who happens to pick up the
phone.

* Robert Schuler's Crystal Cathedral -- one of the poor performers on
the Ministry Watch list -- uses an autodialer to reach "hundreds of
thousand of homes with 30-second recorded messages featuring
Schuller," according to one report. "The upbeat messages urge
listeners to tune in for Schuller's 'Hour of Power' television program
or visit his Garden Grove Church." The program, say church officials,
can reach more than 400,000 homes in a single week. While the
approach has generated higher television rating and attendance at
Schuller's feel-good dramatic performances at the Crystal Cathedral,
"it has also generated complaints from people who don't like
telemarketing."

* Telemarketing under the cloak of religious belief and charity
invites fraud and abuse, at least in the case of an FBI probe into a
man who raised over $10 million in the name of AIDS, disable children
and other causes, including religion. Investigators charged that
Timothy Lyons and his associates invented churches (one had only a
single "member") while pocketing most of the money raised for various
"fees."

The telemarketers "who have no formal religious training, set up
churches as fronts to avoid fund-raising reporting requirements that
restrict most charities," noted an Associated Press Story from August,
2000.

"Federal protections given churches have stymied the country's Boiler
Room Apprehension Task Force," the wire service report continues,
"formed to break up shady telemarketing rings..."

Because of the legal shield provided to religious groups, the cases
confronting law enforcement in this area are, according to one U.S.
Assistant Attorney, "really, really, really tough."

One man close to the scheme who left in disgust of the unethical
practices noted, "Everything we did was totally legal."

* Closer to home, private citizens can be annoyed by telephone
solicitation from local churches pestering people to attend events --
something that a secular nonprofit group may be prohibited from doing.
Take the case of the LaCroix Church in Cape Girardeau, Missouri which,
according to its own web site, was "planted" by a young minister who
set up his own religious "boiler-room" of sorts.

"With over 100 volunteers from area United Methodist churches, calls
were made over a five-week period inviting the unchurched to the first
worship service. Over 26,000 phone calls were made to the Cape
Girardeau area..."

Legislation Specifically Avoids Religious Groups

Despite the howl from citizens who want to put an end to the
telemarketers, legislation has been careful to provide exemptions for
a number of groups including religious organizations. As a result,
when the telemarketing industry gathers to discuss operations and its
financial future, there is no need for representation from
ecclesiastical groups. Private business which use telemarketing or
are in the solicitation industry grapple with a growing laundry list
of regulations which state governments -- and now possibly the federal
government -- impose.

At a trade conference this past summer, for instance, a phalanx of
representatives from various interest groups including the National
Consumers League, Promotion Marketing, National Retail Federation and
the National Association of Attorneys General converged on Washington,
DC to discuss the new impending FTC guidelines. No explicitly
religious groups were represented, although one official from the Not
For Profit and Charitable Coalition was present.

Like the new FTC guidelines, state laws protect religious groups when
it comes to telemarketing practices. In 1995, for example, the US
Court of Appeals took up the case of an Ohio law implemented in 1990
that was passed in hopes of curtailing "fraudulent activities in the
solicitation of charitable donations." Groups were required to file
paperwork with the state and pay a registration bond ($50 to $200).
There was a specific exemption from these requirement, though for
"various educational and charitable organizations meeting certain
stated criteria and 'any religious agencies and organizations,' "
noted the Court.

Incredibly, the Court immediately dismissed any arguments to the
effect that the special legal carve-out for religious ministries and
charities might violate the separation of church and state by giving
preferential treatment to churches. The justices noted that "The
statutory distinction between religious and non-religious
organizations is ... more problematic" than other parts of the Ohio
statute, but concluded that it nevertheless passed constitutional
muster.

In New York State, the charge to limit telemarketers has resulted in a
DNC list, penalties and other efforts to curtail what some say is a
$40 billion-a-year-fraud. But while he cheers the new legislation,
Assemblyman Willis H. Stephens noted in the Putnam County News last
week, "As enacted by the legislature, the new law contains some
exceptions for certain telemarketing calls, including: charitable
organizations, religious corporations, political parties and
committees, companies with which someone has a prior business
relationship; and telemarketers requesting a face-to-face meeting
before concluding a sales transaction."

Even the FTC has sought to avoid the contentious issue of exemptions
from statutory restraints or requirements on telemarketers.

During the public hearings conducted last summer by the FTC, opponents
lined up to warned that regulations could affect a thriving $660
billion telemarketing industry and even de-rail charitable groups.

Religious Telemarketing: A Growth Industry?
The Faith-Based Initiative Connection

With President Bush enticing more religious groups to join the rush to
the public trough in search of government funding, faith-based
charities and social programs await an incredible infusion of cash.

"It's the largest transfer of wealth between the U.S.Treasury and
churches," warns Ellen Johnson, President of American Atheists. "It
invites fraud, waste and deception because there are no regulatory
mechanisms in place to track money, to see where the cash goes, and
whether there is co-mingling between religious activities and the task
of providing social services."

Because of this lack of accountability and fiscal oversight, religious
groups increasingly enjoy a form of immunity their secular
counterparts often lack. The new FTC rules on telemarketing, and new
legislation introduced on Capitol Hill this week by Rep. Billy Tauzin
of Louisiana, beef up the government's power to monitor and punish
telemarketers who violate consumer privacy, but do not address abuses
by religious groups, teleministries, parachurches and fly-by-night
"churches."

The faith-based initiative may even encourage participating religious
groups to raise even more money for various activities, supplementing
their government entitlement checks with more sophisticated
solicitations aimed at the general public. And as religion becomes a
more appealing cover for telemarketing scam artists, the sheer volume
of calls is bound to increase. During the FTC hearings, for instance,
one person commenting on the proposed changes urged "No exceptions to
the rule," adding: "The number of 'certain religious and
charitable' organizations is quite high, and for the consumer to
contact all of them to demand they stop contact is a high burden on
the consumer."

Even with new controls such as a central Do Not Call list over
automated message machines and live telemarketers trying to sell us
all sorts of products, religious solicitations will continue and even
possibly grow in number. If you thought you stopped the pesky
newspaper subscription pitch or promise of a free Caribbean cruise,
you may still hear the phone ringing, inviting you to attend a revival
service, read the Bible or Koran, and even give your credit card
number to a shady televangelist.

For further information:

http://www.atheists.org/flash.line/faith34.htm
("Good God! Faith-based scams proliferate, raise questions about federal,
local
funding initiatives," 8/13/01)