The direct marketing industry will face tougher new legal obstacles in 2003. Marketers and their suppliers need to keep the regulatory climate and developing legal restrictions in mind for upcoming marketing activities.
Gramm-Leach-Bliley extends reach. Though personal data is the lifeblood of direct marketing, privacy remains a growing concern for regulators, politicians and consumers. The landmark Gramm-Leach-Bliley legislation, which on its face applies only to financial institutions as broadly defined under the law, is being applied to other businesses.
The Federal Trade Commission is looking at applying GLB to list brokers and other data collectors and users, not just financial institutions.
FTC enforcement action is thought to be around the corner in order for the agency to show that the law applies to many businesses and the severity of noncompliance. Businesses that receive nonpublic financial information need to take extra precautions to ensure that they act in accordance with the law. Marketers must be aware of the privacy policies of vendors whose data they use and also must ensure that these policies are adhered to when they or their customers use the data.
National do-not-call list. A growing number of states are enacting state-run do-not-call lists. Though such laws are being enacted under the guise of consumer protection, they also provide states with revenue as fees are required for a business to obtain the list and the updates.
The FTC has advised that it intends to release its national DNC regulations by the end of the year, though nothing has come as of the writing of this column. The FTC’s list likely will not replace the myriad state lists, but will supplement them, erecting even more hurdles for businesses and consumers.
And the Federal Communications Commission has said it may throw its regulatory weight into the mix by requesting comments on a national DNC list overseen by the FCC. Theoretically, the FCC list could be more comprehensive than the FTC list and might have a chance at replacing the state-run lists. It also might help deal with the problem of people on the list moving and the “do-not-call” telephone number being reassigned.
An aggressive Postal Inspection Service. Marketers are seeing an empowered Postal Inspection Service that now aggressively uses the monetary penalty provision of the Deceptive Mail Prevention and Enforcement Act of 1999.
That law, enacted to address concerns in sweepstakes marketing, includes a provision to fine a mailer that violates the deceptive prong of the postal code – whether or not it involves a sweepstakes. Fines are based on the quantity of mail, with a 100,000 mailing being subject to a $1 million fine.
Accordingly, marketers who use direct mail to sell their products and services must ensure that their pieces are not false or misleading and comply with the laws enforced by the postal service.
Growing supplier liability. A regulatory trend is focused on supplier liability. Frustrated with the lack of deterrence generated by case-by-case enforcement against marketers, the FTC is considering increased enforcement against suppliers to those marketers. Expect FTC enforcement actions against list brokers, printers and media that fail to undertake sufficient due diligence regarding a product’s performance claims, particularly in the diet area.
Growing anti-spam/UCE laws. As with state DNC lists in telemarketing, the number of states enacting restrictions on unsolicited commercial e-mail marketing continues to grow.
Though bills continue to be introduced in Washington for uniform federal legislation, none has been passed. Unless sensible federal legislation that preempts the state laws is enacted soon, marketers may face the problems seen in telemarketing and sweepstakes in which complex, sometimes conflicting, state laws essentially have supplanted the federal law.
Given the interstate aspect of e-mail marketing, the federal government should enact legislation in the next year or so. Meanwhile, states will continue to enact their own laws to thwart unsolicited commercial e-mail.
Boost for interstate commerce. A federal district court in New York recently struck down the state’s prohibition on interstate shipping of wine as being violative of the constitutional amendment prohibiting state restrictions on interstate commerce.
The law was deemed unconstitutional because it permitted in-state shipment of wine but barred wine from other states being shipped to consumers. Thus, the court found that the law unfairly restricted interstate commerce while protecting in-state commerce.
The decision, along with some recent decisions in other states, represents not only a victory for New York oenophiles wanting to order hard-to-get wines directly from out-of-state wineries, but a step forward for direct marketers.
At least in this context, the court recognized the primacy of the interstate commerce clause over unfairly restrictive state laws. Hopefully, other courts will follow suit, not just in the wine context, but will strike state laws that unnecessarily restrict interstate commerce.