Representatives Stearns and Matheson Introduce Privacy Bill; Legislation Risks Harming Vibrant Information Economy with Minimal Consumer Benefit

April 13, 2011 — Representatives Cliff Stearns (R-FL) and Jim Matheson (D-UT) today introduced the “Consumer Privacy Protection Act of 2011.” DMA continues to voice concerns that legislation in this area would have unintended consequences for the growth of the direct marketing/information economy and the millions of jobs it supports.

In fact, DMA members and the marketing community at-large, already do many of the things that the Stearns-Matheson bill would require, such as requiring marketers to provide consumers with adequate and timely notice and the choice of opting-out of use of their personally-identifiable information. DMA has had an extensive and well-developed self-regulatory program for close to forty years, and routinely updates its Guidelines for Ethical Business Practices to account for the development of new technology and marketing practices. DMA’s Guidelines generally comport with Fair Information Practices Policies (FIPPs). Government regulation in a segment of the economy that demonstrated no market failure and is growing in both scope and consumer confidence can have both a chilling effect and a cost burden. America does not need those brakes applied to this vibrant sector of its economy.

Industry already safeguards consumer interests through these widely-accepted best practices, providing substantive privacy protections while still affording consumers the vast benefits of free content and services across the Internet. Given that an actual harm to consumers has not been demonstrated, DMA is wary that legislation in this area could upend the direct marketing/information economy that supports over 10 million jobs and generated $1.931 trillion in economic activity in 2011, of which 3.1 million jobs and $503.6 billion in sales is directly related to online marketing.

DMA is also concerned that several areas of the bill, as introduced, are not only confusing, but unworkable. It is unclear who would have the obligation to obtain permission from a consumer to collect information and whether notice in a privacy policy or some other form would suffice. Further, it is not clear how these new requirements would apply in the offline environment, particularly with regard to print marketing materials.

It is DMA’s view that the bill is overly prescriptive and delegates too much additional authority to the Federal Trade Commission (FTC), particularly in the area of self-regulation. It is not necessary or appropriate to give the FTC authority to regulate self-regulatory programs or to review corporate privacy policies. This type of government oversight would reduce the effectiveness of existing self-regulatory efforts and discourage future efforts by industry.

DMA also believes that the bill’s coverage of charitable nonprofits, including 501(c)3 organizations, raises serious free-speech issues. In addition, these organizations already are heavily regulated by the states. Additional federal regulation could be crippling to nonprofits that provide a host of vital services to their local communities.

DMA looks forward to continuing its work with Representatives Stearns and Matheson and their staffs to ensure that any legislation safeguards the growth of the Internet and the technological innovation that drives the US economy.

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About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents companies from dozens of vertical industries in the US and 48 other nations, including nearly half of the Fortune 100 companies, as well as nonprofit organizations.

In 2010, marketers – commercial and nonprofit – spent $153.3 billion on direct marketing, which accounted for 54.2% of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures generated approximately $1.798 trillion in incremental sales. In 2010, direct marketing accounted for 8.3% of total US gross domestic product. Also in 2010, there were 1.4 million direct marketing employees in the US. Their collective sales efforts directly supported 8.4 million other jobs, accounting for a total of 9.8 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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