Even before last week's announcement of a Federal Trade Commission settlement with three list firms, the Direct Marketing Association had begun working with the industry on new guidelines for list professionals, owners and users to try to allay consumer concerns and prevent further legislation regulating list practices.
“We surely are cognizant of the fact that with the FTC's recent look at the list industry and legislation in Congress that looks at list brokerage, we need to review the guidelines to be sure they are in sync with what's going on today,” said Harriet Heyman, vice chairwoman of the DMA's Ethics Policy Committee. “We are reviewing not just the list guidelines, but also all the DMA ethics guidelines.”
Heyman is vice president, senior strategic consultant, at San Antonio-based Harte-Hanks Inc. The legislation she referred to is the Children's Listbroker Privacy Act, introduced in the Senate in March by Sens. Ron Wyden, D-OR, and Ted Stevens, R-AK, and by Rep. Darlene Hooley, D-OR, in the House in July.
The act would prohibit the rental of personal information of children younger than 16 for marketing purposes without parental consent. The bill defines personal information as name, address, e-mail address, telephone number, Social Security number and any other information identifying a person.
As for the FTC settlement last week, list managers Carney Direct, ListData Computer Services and NeWorld Marketing settled allegations of their involvement in a telemarketing advanced-fee credit scheme and will pay a total of $187,500.
Though new list industry guidelines might prove effective in killing any number of bills floating around Congress and state legislatures, the DMA's current Ethical Business Practice guidelines should have been enough to prevent the FTC from needing to investigate at least the two companies that are DMA members, Carney Direct and NeWorld.
“Our guidelines say that members should ascertain the nature of the list's intended use for each materially different marketing use,” said Pat Faley Kachura, vice president for ethics and consumer affairs at the DMA.
Article 35 under the heading Marketing List Usage reads: “List owners, brokers, managers, compilers and users of marketing lists should ascertain the nature of the list's intended usage for each materially different marketing use prior to rental, sale, exchange, transfer or use of the list. List owners, brokers, managers and compilers should not permit the rental, sale, exchange or transfer of their marketing lists, nor should users use any marketing lists, for an offer that is in violation of these guidelines.”
Though Faley Kachura said the DMA has taken note of this, it does not appear that any action will be taken against the companies.
“I think what these three cases highlight is that this is an area that is going to be new to marketers who are operating in a highly regulated environment at both the federal and the state levels,” she said. “It's not surprising that a company may have made a mistake here, but it looks like whatever the FTC was concerned about has been corrected. The best thing we can do as an association is help other marketers learn from this position … and educate them about the new, complex legal environment. This really tells our members you really have got to get legal advice.”
Regarding new list guidelines, industry professionals voiced support for such measures at the DMA's List Vision conference earlier this month. In a panel discussion, Chicca D'Agostino, president of Focus USA, Hackensack, NJ, relayed a story of a list owner who was contacted by the FTC about a year ago and had to supply hundreds of documents and undergo eight hours of interrogation-style questioning about data and its collection and use. She told DM News that the party in her cautionary tale was not one of the three involved in the FTC settlement.
“There is ongoing investigation by the FTC,” D'Agostino said. “They know the names of the people in the industry in terms of list manager, list broker, compiler. They read the same publications we do. They see what we're advertising. They know what's going on in our industry, and they want to find out more.”
Though D'Agostino backs the idea of stricter list guidelines, she lamented that not enough people in the industry know of the current guidelines. She also advocated consumer education and more transparency about data practices.
Another list professional who spoke on these issues at List Vision agreed.
“Consumers have rights, too, and we had better start focusing and making this a priority for ourselves before someone does it for us,” said Chris Paradysz, CEO of ParadyszMatera, New York. “The industry needs to rally behind the principles of what the proper use of data is and define that as an industry and work together to put together a set of principle-based usage strategies keeping the consumer in mind.”
Paradysz said privacy is the most crucial issue facing the list industry. However, laying out new guidelines and approving them is time consuming. Faley Kachura said the guidelines won't be out until next year.
“Every guideline that comes out of the DMA has to go through multiple committees and our board of directors,” she said. “We're not even close to coming out with anything. We do not even have a draft at this point.”
Heyman said that one potential guideline discussed at List Vision was the idea of giving prospects the chance to opt out of third-party data sharing at the point of data collection.
“Hotline names are probably the most problematic issue,” she said. “If you give the consumer an opportunity to opt out, you have to give it time before the name is rented to make sure opt outs are honored.”
Heyman predicted that finding the right balance for the guidelines would be a challenge, but worth the effort. She also stressed that it is an inclusive process.
“We want to make sure that the industry doesn't think that we are going to write new guidelines and ram them down everyone's throats, because that's not the way we've ever worked at the Ethics Policy Committee,” she said.
