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A Legal View of Permission Marketing

When asked, “What is permission marketing?” most marketers are likely to say, “communicating with consumers who have granted their permission to receive such communications.”

From a legal perspective, this answer raises more questions: How was permission granted? What does the permission cover? To whom has the consumer granted permission to be marketed? Can permission be transferred to another entity?

Permission marketing has been around for years. However, the term came into online vogue several years ago when marketing guru Seth Godin (formerly of Yoyodyne and Yahoo and the recent founder of DoYou Zoom Inc.) authored a book of the same title. Godin argued, and still does, that a company stands a greater chance of success if it develops and cultivates relationships with consumers rather than engaging in mass-market interruption marketing campaigns. Rather than barrage consumers with impersonal advertising, Godin urges companies to first establish relationships with consumers, learn their likes and dislikes, earn their trust to continue the dialogue and then present relevant and, most significantly, anticipated offers. Conceptually, this idea relies on the existence of a direct relationship between the company and the consumer.

Mailing an inhouse list. Marketing to an inhouse customer list may or may not be permission-based. If an e-mail campaign is directed to consumers who have requested such communications, the campaign may be safely labeled permission marketing. However, if a company transmits e-mail solicitations to all of its customers generally, but the intended recipients have neither requested nor granted consent to receive the message, the communication may be perceived as spam.

Though these consumers may not appreciate receiving the unsolicited mailing, the risk of a lawsuit is relatively low, particularly if the company’s privacy policy or other legal statement informs customers that all customers of the site, including those who simply made inquiries, will receive these messages, and if the e-mail message allows recipients the ability to opt out of receiving future messages. The risk of a lawsuit is further reduced if the intended recipients are customers, as many state anti-spam laws allow unsolicited commercial e-mails to be sent to people with whom the sender has a prior relationship.

If you intend to mail your inhouse list, it is advisable to inform your customers upfront — preferably on a sign-up or order page, but at a minimum in your privacy policy — that they may receive these messages, and give them the opportunity to opt out of future solicitations. All opt-out requests should be honored.

If you intend to use e-mail to communicate with your customers for various purposes, you may want to limit the scope of the opt-out to cover only unsolicited commercial offers. Even if a customer elects not to receive your promotions and offers by e-mail, you will want to reserve the right to communicate with him in connection with an order, back order or product recall.

Mailing a third-party list. Online marketers have taken permission marketing a step further — renting lists of consumers who may have agreed, in one form or another, to receive “special offers” from “partners” of the company compiling the list. While list developers and brokers often promote these lists as opt-in, the manner by which they were compiled can differ dramatically.

Some lists are created by requiring consumers to take an affirmative action: “Check here if you want to receive special offers from our partners.”

Others are designed to automatically include the consumer on the list unless he takes an action to be removed: “I would like to receive special offers from partners” [adjacent to a pre-checked box], or, “We would like to provide your name to our partners for special offers. Check here if you do not want to receive these offers.”

Without debating the merits and shortcomings of each of these collection models, the issue remains that list developers and brokers promote these lists as having the permission of the listed consumers to be marketed. Companies that rent and mail these lists are led to (and apparently do) believe that they are engaging in permission marketing.

But are they?

Can mailing a third-party list really be considered permission marketing?

While the distinction has not yet been raised as a legal issue, marketers that rent third-party lists should consider whether it is appropriate for their overall marketing program.

Should you mail a rented list? If you decide to mail a rented list, consider the inherent risks. The consumers on the list may have agreed to receive “offers” from the data collector’s “partners,” but how will they respond to your e-mail promotion? Ask yourself, among other things, is there a logical and expected connection between you and the data collector? How credible is the data collector’s list? Even if a consumer agreed to receive the types of opportunities that you are offering, the fact remains that permission was given to the data collector, not to you.

How was permission granted? Ask the data collector or broker, “How was the list compiled?” With few exceptions, there is no U.S. law that addresses how a consumer’s permission must be obtained for marketing purposes (exceptions include information regarding children, driver registration, financial records and medical records). Thus, online marketers are for the most part free to collect information from consumers and use (and share) such information for marketing purposes.

However, not surprisingly, consumers, consumer advocacy groups, regulators and legislators are becoming increasingly sensitive to industry data sharing practices, particularly in the online world. These concerns are evidenced by swelling court dockets filled with cases brought by consumers and law enforcement authorities, and the plethora of privacy-related bills introduced in Congress and the statehouses over the past two years.

As a result, companies that rent third-party lists for marketing purposes should know under what circumstances the information they intend to use was collected, what consumers were told about how their information would be used at the time such information was collected, and, if applicable, if the provision of information was subject to a privacy policy or other legal statement. If the list contains names and addresses of consumers who never actually gave their consent to receive third-party marketing material, you may very well end up with an in-box full of nasty messages or a heavily flamed site. Some upfront due diligence could reduce the likelihood of these and other adverse results.

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