DMA Reviews 55 Ethics Cases

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A year after beginning the public disclosure of ethics guidelines violations, the Direct Marketing Association has scrutinized more than 55 grievances, issued four reports on complaint trends and even referred some matters to state-level law-enforcement agencies.

All that, however, may not be enough to meet self-regulatory standards that some in the industry say are required to make the violations process effective.

The reports aim to educate direct marketers about the guidelines and to encourage the adherence to a set of business ethics standards, but they do not include names of companies or organizations whose practices are questioned. Nor do they describe the violation in question.

They do, however, summarize consumer complaints and give the status of cases -- whether they are resolved, found not in violation of the standards or referred to a state-level enforcement agency.

But that may change with April's report. For the first time, names of direct marketers whose practices have been called into question may be revealed. Only the names of those refusing to aid the investigation by DMA's business ethics committee, a long-standing 15-member team that oversees the grievance process, will be revealed. Twenty-three cases, including 10 new ones, are expected to be detailed in the report.

"Something is better than nothing," said Robert Gellman, a Washington-based privacy and information policy consultant. "It is another step in the right direction, and the association deserves some credit for taking the steps. But the standards that are being applied are incomplete, and the problem of incomplete standards is very serious. They do not address the element of fair information practices."

Despite naysayers' thoughts on the shortcomings of the grievance process, the DMA contends that the public disclosure of the process is doing exactly what was intended.

"If nothing else, it helps direct marketers understand the issues and concerns that are foremost in consumer minds," said Lindy Litrides, chairwoman of the committee on ethical business practices and group vice president of marketing for the Arthritis Foundation. "With that information, direct marketers can adjust their marketing strategies. All of us know that customer service is the most important factor in developing a relationship, and most direct marketers want to protect and enhance that relationship."

Rather than serving to hold up companies in violation of any ethics standards, Litrides said, the disclosure of the case reports is intended to generate industry-wide adherence to the standards.

"It doesn't help to name a company that is involved in an ethics review," she said. "If that company makes necessary changes, why berate that company publicly? The companies that come before the ethics committee have been very responsive. There are fewer problems than one would think."

Litrides said the process is serving its purpose "if they [companies] have agreed to change a promotion and agree what they have done is a violation." The committee reviews consumer complaints not only against DMA members, but also against nonmember organizations.

"We really are looking to educate people and to make people more aware of the guidelines and to have them adhere to them," she said.

Of the 55 cases that the committee has reviewed since going public with the process a year ago, all but 14 were resolved or are pending. One company, however, withdrew its DMA membership after being cited in one of the earlier reports. Eight of the cases were declared as not violating the standards, and six cases were referred to a variety of state-level government agencies, including the U.S. Postal Inspection Office, attorneys general offices and the Federal Trade Commission, according to Marsha Goldberger, director of ethics and consumer affairs at the DMA.

"At this point, the system works fine," Litrides said. "It is the first step in the process of education, and that is really where the DMA is coming from. As a direct marketer, I welcome the association's involvement because it helps keep the industry as a whole honest -- and that can only help build a relationship with consumers."

Others in the industry agree that it is a step in the right direction but that more measures need to be taken to ensure the process stays a self-regulatory initiative.

Ryan Lake of The Lake Group, Rye, NY, called for additional steps.

"The DMA has always been really good about lobbying for direct marketers and trying to keeping the government out of regulation. But to govern self-regulation, the DMA probably has to be able to enforce penalties against those who do not comply with the standards," he said. "The majority of companies comply with the standards -- but for the minority that do not, the DMA should have the authority to come down on those organizations. It is a step in the right direction, but to be truly effective the case reports should provide statistics."

While the reports do provide some statistics, they are general summaries of consumer complaints.

"The case reports are intended to share information about the kinds of concerns consumers have," Litrides said.

As with the American Marketing Association's set of standards, the DMA's standards have been in place since the 1960s with ongoing amendments. But while the DMA monitors violations against its guidelines, the AMA does not.

"It is hard as an industry body to monitor that because as a professional society the only recourse we have is to take away membership," said AMA chairwoman Sybil Stershic, who lauded the DMA's efforts. "It's a good thing. It says, 'We're not going to sit idly by while a few unethical people ruin things for the rest of us.' "

The DMA reports are issued three times a year. Additional releases are slated for August and December.

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