DM Use of Electoral Roll Is in PerilLONDON - Last June this column addressed the possibility of direct marketing companies being refused access to the UK's electoral register - the country's unique source of basic information on the adult population. What has happened subsequently constitutes a major blow for many companies mailing, or thinking of mailing, in the UK.
The British Government initially ordered a review of commercial use of the register because there was anecdotal evidence to suggest that some consumers were not registering to vote because they disliked receiving direct mail as a result. Given that the Labour Government has pledged to raise the turnout at elections, this was frowned upon.
Nine months on the good news is that government now acknowledges there is no foundation to its original supposition. The bad news is that, despite this, they have pressed ahead with the review and its conclusion is that consumers should be allowed to opt out of having the information on electoral registration forms used for commercial purposes.
That recommendation was part of the Representation of the People Bill passed recently by the House of Commons and House of Lords.
Intensive lobbying by firms such as WWAV Rapp Collins, has, at least, received one concession: The full electoral register can still be used for credit referencing - vital for companies in sectors such as financial services and mail order. To do otherwise would have increased the levels of credit fraud and exempted certain sections of the population from basic financial services.
Although there is still room for more compromise since the detail of how the new system will work has yet to be decided, it is unlikely that any further progress will be made.
This is despite the fact that we, and others, argued that the full register should also be available for list and database cleaning and screening.
It is a requirement of the UK Data Protection Act that all data should be kept as up to date and accurate as possible. Running lists against the electoral roll is the easiest and most efficient way do this.
So what does all this mean and how might it affect American companies? For anyone in, or intending to get into, areas such as financial services and mail order - prime sectors for American entrants - the effect will be significant.
Depending on how many consumers actually opt out of commercial use - the Government has pledged to include a leaflet explaining the pros and cons of opting out - targeting systems could be badly disabled.
The register provides confirmation of residency, the number of individuals at a particular household and, through comparison with previous registers and the length of time that someone has lived at an address. As such it forms the very base for most targeting systems but is seldom used as a mailing list in its own right.
Credit pre-screening would also be more difficult. Pre-screens prevent those unlikely to be approved credit from receiving solicitations. Pre-screening also is used to offer consumers pre-approved credit.
Companies also will be wary about delivering a credit card to an area with an above-average level of fraud if they are unable to confirm the residency of the applicant.
By making targeting more difficult, lack of access to the full register also will inevitably increase the level of untargeted mailings. And given that comparison of successive registers also identifies "gone aways," this task too will become much more difficult.
So what are direct marketers to do? Initially major efforts will have to be made to warn consumers of the perils of opting out. Those who do may find themselves socially excluded from basic financial services. Clearly the less people who opt out, the less damage will be done to the DM industry.
The new opt out system will be in place when the next ER information is collected in October. It will then become apparent what the opt out levels are and the extent of the data "gap." Already companies are beginning to plan how to adapt to the new environment.
The electoral register issue is symptomatic of the growth in privacy legislation in the European Union. The Government defended its opt out system by claiming it was merely complying with EC Data Protection legislation, a moot point.
Intriguingly, while most organizations will soon be denied access to the full register, political parties will continue to be allowed to use it for fundraising. Funny how politicians can always make themselves an exception.