Update: DPPA Ruling Sinks in With Marketers
The court ruled unanimously this month that Congress had the authority to enact the Driver's Privacy Protection Act of 1994, which makes it difficult for marketing firms and others to buy information contained in driver's licenses and vehicle registrations. The ruling will be felt nationwide as most states had been selling the information to marketing companies.
The ruling means that marketers may have to use alternative sources - like credit bureaus, the U.S. Postal Service's change-of-address data, voter registration and land ownership documents - for information needed to target buyers, but the motor vehicle and driver's license data are considered the most up-to-date and accurate.
In the short term, however, it's business as usual because the data will be available until June 1 and will remain usable for a number of years. Specifically, motor vehicle data includes type of car purchased; and driver's license data includes telephone number, address, gender, date of birth, weight, height, eyeglass use and sometimes medical information.
Initially, the statute barred the release of personal information if an individual notified the state that the information should be kept private, but few people bothered to take such action. Last summer, Sen. Richard Shelby, R-AL, introduced an amendment stating that companies needed to get the individual's permission before using the information. Marketers balked at this because when asked directly if their information may be released, most consumers say no. The law included a stipulation that if states fail to comply with the amendment by June 1, they would be cut off from federal highway funding.
While direct marketers buy this data from states, Acxiom Corp., Polk Co., Experian and other large list compilers are the main purchasers of the information. These companies use the information in their list or data-enhancement products, which they then sell to direct marketers. In the case of driver data, direct marketers often overlay their house files with fields that include driver data to help them target the right people for particular promotions.
"Take, for example, a company like Sears. They may take a list of their customers to a company like Acxiom, and we can tell them which people, who are a certain age, who have corrective lenses," said Dan Hinman, group leader of data content at Acxiom, Little Rock, AR. "With this information in hand, they can send a targeted offer to the particular group they are trying to reach."
Age - taken directly from the licenses - is extremely popular. "Every direct marketer usually does some kind of segmentation based upon age," Hinman said. "This ruling will have an impact, in that it will reduce the availability of age information and, therefore, will require marketers to either find other sources or not be able to target as well. We have a potential for seeing more untargeted mail, which ends up ultimately hurting the consumer."
Motor vehicle data is often used as a lifestyle indicator, and is utilized heavily by the automobile industry in particular. John Milos, president of Stylin Concepts Inc., Independence, OH, a cataloger that sells accessories for autos, trucks, minivans and sports-utility vehicles, said he purchases state vehicle data from Polk in order to send targeted catalogs to specific car buyers. The ruling, however, will force his company, and others like his, to send out mass mailings using data from alternate sources to create fields based on general income values or ZIP codes.
"If I mailed a minivan catalog to everybody in my neighborhood, 30 out of the 100 homes probably have minivans, but I will have to send out 100 catalogs to find those 30 minivan customers. Before, I could have only sent 30 catalogs," he said.
Driver data "is one of the most inclusive sets of all of the adults in a state," according to Dick Barton, senior vice president of congressional relations at the Direct Marketing Association. And, while the information will remain accurate for several years, it will erode over time as people move, and the consistently updated information is what has made state driver's license and vehicle-registration information so valuable. Congress can still change the Shelby Amendment before June, but that isn't likely. The explosion of information technology has made privacy a potent political issue. Some states are even seeking to eliminate the sale of driver data lists.
Last week, Michigan secretary of state Candice S. Miller said she will seek to ban what she called "junk mail" list sales by its State Department. In addition, she said state Rep. Tony Stamas has drafted legislation banning the sale of lists by the department for marketing, survey and solicitation purposes. However, the state made $1.1 million from the sale of driver data last year.
"[Even though] our department will lose a revenue source, clearly, we need to put the right to personal privacy over dollars," Miller said.
Ironically, data provider Experian, Orange, CA, launched a new national vehicle database this month that contains 9 billion rows of data on more than 300 million vehicles; it incorporates automotive data, demographic and lifestage information from more than 150 sources, including DMV data files; and is updated daily. Experian announced the database at the National Automotive Dealers Association annual conference in Orlando last week.