When I testified about opt-in e-mail marketing at the Federal Trade Commission's consumer online privacy hearings in June 1997, Commissioner Christine Varney asked our panel — a panel that included not only myself but privacy advocate Jason Catlett, Direct Marketing Association’s President Bob Wientzen and super-spammer Sanford Wallace — to go back and find a solution to the Internet privacy issue that would satisfy consumers, marketers and privacy advocates alike.
Commissioners will hear testimony from the Advisory Committee on Online Access and Security, a 40-member industry panel established by the FTC to advise the government on how to make consumers feel safe while surfing and shopping on the Net. The committee, which favors self-regulation of the Internet marketing industry, is expected to submit its report in mid-May.
But this time around, the forces of self-regulation may not prevail. Amid outcry from consumers and privacy advocates about security breaches and invasive data collection practices from leading Web sites, lawmakers are increasingly calling for solutions that would not only give consumers the right to “opt out,” or remove themselves from Internet databases, but would go even farther and require marketers to obtain consumers' prior approval for data collection and usage, a practice known as “opt-in.”
Recently, Sen. Robert Torricelli, D-NJ, a long-time foe of unsolicited commercial e-mail messages, announced plans to sponsor a bill that would not only mandate opt-in data collection practices for e-mail lists but for banner ads as well. New York, California and other states are considering legislation that would require Web marketers to give consumers greater say over the type of information these companies can collect and what they can do with the data.
If you think this is all just election-year blather, think again. Last month, a California woman sued DoubleClick, alleging that the Internet advertising company illegally engaged in unfair and misleading business practices by merging its anonymous Internet surfing profiles with the postal name and address database that it acquired when it bought Abacus Direct last spring. Yahoo is being sued by a Texas company called Universal Image, which claims that the Web portal's use of “cookies” (small text files stored on Internet users' hard drives to track the users as they surf from site to site) is a violation of the state's anti-stalking laws.
In my view, the time for industry self-regulation has passed. Consumers never liked junk mail in the postal world, and they like it even less on the Net. The same goes for cookie-tracking, online profiling, and appending e-mail addresses to postal house files. According to the 1996 Harris-Equifax Consumer Privacy Survey, 73 percent of Americans want their names removed from mailing lists; most of them just don't know how to do it.
Why legislate opt-in data collection practices on the Internet? Two reasons: One, because it's the right thing to do — for marketers and consumers alike. In the past, direct marketers have argued that requiring them to obtain consumers' permission before sending them catalogs and credit card offers by postal mail would raise costs and destroy the direct marketing industry. Thanks to the Internet, consumers can communicate their marketing preferences via the Web and receive offers about products and services of interest by email. The success of companies like MyPoints, Yesmail, Freeshop and our company's own PostMasterDirect.com opt-in email marketing service show that there is simply no need to legalize opt out on the Internet in order for direct marketers to do business there. Companies like AllAdvantage.com, which pays Internet users to surf the Web and allows them to decide which marketers to share their information with, demonstrate that banners can be delivered on an opt-in basis as well.
The second reason is more pragmatic. Public opinion polls, news reports and the recent flurry of lobbying activity in Washington, all indicate that online privacy legislation is headed our way whether we like it or not. Personally, I'd hate to see a group of politicians who know very little about our industry pass laws that may slow down our industry's future growth. Rather than fight public opinion and lose, I think that we'll get a lot farther by cooperating with lawmakers and consumer groups to draft laws that will allow our nascent industry to develop while protecting the privacy of Internet consumers who surf by our sites, sign up for our email lists and shop at our online stores. If we don't act now, we may lose that chance forever.