WASHINGTON — Direct marketers face political battles on virtually all fronts this year, DMA president/CEO H. Robert Wientzen told attendees at the Direct Marketing Association Government Affairs Conference here yesterday.
The public will view these battles as “direct marketers versus consumers,” Wientzen said. “They will generate bad press, tarnish the industry's already less-than-gleaming image and, in turn, negatively impact marketers' bottom lines and nonprofit organizations' charitable missions.”
Wientzen presented six DM issues that likely will play out negatively in the press: postal rates and reform, remote sales tax collection, privacy, spam, telemarketing and recommitting to Earth-friendly practices.
As for postal, Wientzen said the good news is that the U.S. Postal Service will not raise rates until sometime in 2006.
But “there are some trends and political maneuverings that will have a big impact on the size of the next increase, which we believe could fall, depending on how these events play out in the coming months, between the high single digit and the mid-teens,” he said.
Wientzen also said he was growing uneasy about the likelihood that Congress would pass meaningful postal reform legislation.
Getting a bill through Congress, he said, “will be a big challenge, bigger than I thought, frankly, six months ago.” And even if “we do get legislation that looks like it could make it to the president, I am concerned that it will be a bland, toothless bill due to all the politics we are dealing with.”
As for remote sales tax collection, Wientzen said, “we believe that neither the president nor the Congress this year, an election year, will burden businesses with this costly responsibility.”
However, he said Sens. Mike Enzi, R-WY, and Byron Dorgan, D-ND, asked the Senate Finance Committee to hold a hearing on the Streamlined Sales Tax Agreement supported by about 40 states. This agreement calls for mandatory tax collection regardless of nexus under a plan that would simplify state and local tax rates.
The third issue, privacy, will not abate, Wientzen said.
“Our industry and its data-use practices remain near the eye of the storm,” he said. “As a result, legislation both in Washington and the states is being introduced left and right.”
The latest on Capitol Hill, he said, is a bill by Sens. Ron Wyden, D-OR, and Ted Stevens, R-AK, that would make it unlawful to buy or sell personal information about a person younger than 16 for marketing purposes unless the parent gave “express consent.” The bill, S.2160, is called the Children's Listbroker Privacy Act.
The DMA is working with the two senators to determine their concerns and with the list community to ascertain their practices in this area.
Wientzen also flagged another recent twist on the privacy front in Washington concerning offshoring database operations.
“In short, there are concerns that overseas operations might fail to meet U.S. laws regarding data usage and security,” he said.
Sen. Hillary Rodham Clinton, D-NY, introduced a bill this month, he said, that would require consumer consent before transmitting personally identifiable information to affiliates or subcontractors in a country that lacks adequate privacy protection.
However, Wientzen said, “for those U.S. companies that are offshoring database operations, these overseas operations still fall under American privacy and data security laws and regulations.”
Regarding spam, Wientzen said the DMA is doing everything it can to combat the problem.
“Toward that end, we support a multi-pronged approach that includes legislation, technology, industry self-regulation, consumer education and dogged law enforcement of current consumer protection laws,” he said.
For telemarketing, Wientzen focused on the no-call registry and number portability for cell phones. He said it's too early to quantify the long-term effect of the registry.
But “it's not going to be good, that's for sure,” he said. “Still, I have no doubt that some will find ways to turn this challenge into an opportunity. But the real issue here is how this whole thing will erode consumer trust.”
As for number portability, he reminded attendees that the ability of consumers to switch their landline numbers to their cell phones and vice versa, previously limited to the top 100 markets, expands nationwide May 24.
“That's fine, we have no problems with this,” he said. “But there's one big problem: It's illegal, subject to stiff fines, to make a telemarketing call to a cell phone. Again, we don't have a problem with that. The problem is, however, that telemarketers currently have no way of knowing what landline numbers have been 'ported.'”
However, he said, “it's looking good that we'll be able to work with the [Federal Communications Commission's] list compiler to get these ported numbers on a regular basis so we can, in turn, get those numbers to our members.”
The final issue Wientzen discussed is the environment.
“Throughout the past decade, we worked to address the misperceptions about mailers and the environment while encouraging our industry to commit to more Earth-friendly practices,” he said. “We were successful, and the issue, for the most part, faded by the late '90s.”
But it has returned, as environmental groups again are questioning the industry's practices, especially on catalogers use of post-consumer recycled paper.
“Consequently, we do need to assess the environmental impact of our operations, including our usage of paper products,” he said.
Wientzen said the DMA has established an Environmental Advisory Committee and is updating its “Environmental Resource” book, which it plans to publish next month.