List Industry Could Be FTC's Next Target

The list industry shouldn't be surprised if the Federal Trade Commission comes knocking on its door based on comments by a commission official at an Oct. 24 client briefing held by a Washington law firm.

“We're very interested in pursuing investigations involving lists and list brokers,” said J. Howard Beales, director of the FTC's bureau of consumer protection. “We are very much learning how the industry works and what the issues really are.”

An attorney at Collier Shannon Scott PLLC, a law firm specializing in areas such as advertising, marketing, e-commerce and privacy, thought Beales' remarks were very telling. Collier Shannon hosted the session along with data privacy security and compliance solution provider Privastaff, San Jose, CA.

“I think this industry is on deck,” D. Reed Freeman said. “As a general proposition in privacy matters the days of the free pass are over. I think it's fair to say that the list industry is no longer operating under the radar screen and is going to be scrutinized.”

Beales cited a recent investigation of offline list practices that resulted in an agreement between the commission and American Student List restricting the use of data collected through high school surveys.

The FTC contended that National Research Center for College and University Admissions, which sold the data to ASL for 30 years, in the past had informed students in privacy statements included with the surveys that any information collected would be shared only with colleges, universities and other educational entities. However, the data also went to commercial marketers.

The commission felt that, since the notice given with the surveys did not mention commercial marketing, the data could not be used in that capacity.

“What we said in the orders in the ASL case is that they can't use the information that was collected under the privacy policy that was misleading for anything except the purposes disclosed,” Beales said.

With the Oct. 2 settlement, ASL admitted no wrongdoing but agreed not to rent data to commercial marketers unless that purpose is disclosed at the time of collection.

“It is not enough to say other organizations or trusted third parties,” Freeman said. “Those types of representations may not be as effective as people thought they were. It's not just what you say expressly but what consumers reasonably interpret you to have said.”

If the FTC has turned its attention to the list industry as Beales suggested, list professionals would be wise to look at their practices and be a part of the education process at the commission, Freeman said.

Just because the agency has not taken action in the past or devised a general set of enforcement priorities for the list industry does not mean that it will not, Freeman said.

“The key is not to be the company that gets made an example of,” he said.

Perhaps the best news is that the FTC still does not advocate new privacy legislation. But the commission could pursue list firms if they appear to employ unfair or deceptive business practices.

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