During the last six months of 2004, the Direct Marketing Association referred four companies to law enforcement involving possible ethics violations, according to the DMA July-December 2004 Ethics Case Report released yesterday.
The report outlines the activities of the DMA Committee on Ethical Business Practices and the Teleservices Ethics Committee. DMA president/CEO John A. Greco Jr. has promised increased focus on ethics enforcement by the association as part of its new strategic plan for strengthening the direct marketing industry's brand.
“The ethics committee has received clear direction from the board that it's their job to go out and build a bridge of consumer trust,” said Patricia Kachura, the DMA's senior vice president of ethics and consumer affairs. “One of the things we find is that although many of the cases we have were referred by consumers, we still get a lot of complaints from DMA members who help us patrol the marketplace.”
The four cases include:
· Yellow Pages Inc., Anaheim, CA, offered a promotional check to consumers obligating them to ongoing advertising service if they cashed it. The DMA questioned the clarity of disclosures with the offer and the nature of the service. The company said it would revise the promotion but did not offer changes for the DMA's review, at which point the DMA forwarded the case to the California attorney general, according to the report.
· YourGiftCards.com, Mountain View, CA, offered “free” online products that actually required consumers to open a credit card account or sign up for a club membership, the report said. The company initially said it would consider the DMA's concerns and change its Web site, but when no changes were made, the DMA forwarded the case to the Federal Trade Commission.
· The two remaining cases involved unnamed teleservices companies. One involved prerecorded messages sent for a debt management company, and the other involved a live call from an offshore call center on behalf of a mortgage company. Both involved misleading information, and the DMA referred both to the FTC.
In total, the DMA conducted an in-depth review of 21 cases in the report. The others either were closed after the companies responded or are still pending, the report said.
The DMA is concerned about marketers providing clear disclosures when using “free” offers and the checks that obligate consumers to long-term service, Kachura said. Another concern is that online marketers are creating confusion when they tell consumers that they opted in to receive solicitations, without making clear that the consumer gave permission to an affiliate of the marketer.
Scott Hovanyetz covers telemarketing, production and printing and direct response TV marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters
