List Firms Develop Methods to Meet Compliance Standards
A growing number of scandals involving data access and data use has brought stricter regulations and increased compliance costs for list companies.
List experts say compliance is crucial not only to meet legal requirements but also because clients will do business only with such reputable firms.
"At ALC we partner with well-known, blue-chip companies, so that helps to minimize our exposure," said Britt Bean-Perry, vice president and client marketing manager of American List Counsel, Princeton, NJ. "For the new mailers entering the direct marketing arena, we will perform company background checks, review Better Business Bureau reports and require prepayment and a signed rental agreement."
This type of investigation helps firms protect themselves against misuse of clients' customer files as well as other improper practices.
ALC executive vice president Lori Magill-Cook created a checklist that all new mailers need to pass in order for ALC to ship list rental orders to them.
"Most of the legal issues that have given rise to action in our industry affect the broker and manager equally," Ms. Bean-Perry said. "Both sides have to be aware of the impact and how it applies to their part of the business.
Mike Jorgovan, partner at Complete Mailing Lists, cited some compliance steps his firm takes, including passing its lists through the Direct Marketing Association's suppression and deceased files.
"We house all of our data at highly secure data fulfillment houses to maintain the highest standards of data security," he said. As for e-mail, "we only partner with providers that strictly comply with CAN-SPAM laws."
The Bronxville, NY, company also scrubs its telemarketing records against the national do-not-call list regularly.
"I believe it is imperative for our industry to undertake a far-reaching public relations campaign that tells the world that what we do is good," Mr. Jorgovan said. "It is time to counteract some of the unwarranted negative criticism that has been bestowed upon our community."
Compliance resources exist. The DMA offers an ethical guidelines fact sheet on its Web site. One can sign up for its Ethics and Privacy Network, which gives updates on ethics and consumer protection issues.
The DMA's site offers a government section dealing with legal issues facing the industry, said Deb Goldstein, co-chair of the DMA List Counsel and president of IDG List Services.
List professionals are advised to monitors laws and bills at both the federal and state level. Staying ahead of the information with prevention, interpretation and communication can save time, money and reputation.
"The security breach laws could lead to a much wider net to privacy laws, which is really the biggest threat," Ms. Goldstein said. "It will start in the consumer arena and then possibly spill into the BTB side."
Ms. Goldstein suggested that list companies hire legal counsel or participate in DMA conference calls to gain a proper interpretation of regulations.
"Once you believe you have clearly understood the actions you need to take, well-documented communications is key," she said. "Make sure everyone in your company understands what is necessary to comply. Then do it."
Scrutinize Program Materials, Offers
Andrew Lustigman, a DM News columnist and a lawyer at New York-based Olshan which focuses on direct and promotional marketing law, offers the following advice for mailers, list brokers and list managers:
- Obtain copies of advertising and fulfillment materials being used.
- Compare what is advertised with what is being provided: Do they correlate?
- Ask whether legal counsel has reviewed the program, particularly for dietary supplement (weight loss), business opportunity and other hot-button programs. Ask for a copy of the opinion letter.
- Anything involving gambling should be scrutinized and the legality of the underlying service confirmed.
- If telemarketing is involved, the supplier should confirm that the list used will be scrubbed by or at the direction of the seller under applicable do-not-call lists, and that the telemarketing script complies with the Telemarketing Sales Rule. For this point, legal signoff should be obtained.
- Retain all supporting materials.
"For mailers, objective performance claims should be substantiated and programs should be reviewed for legal compliance," he said. "Confirm that the marketing program overall complies with governing law."