Privacy Issues
January 2000

Privacy issues are considered by many to be the most important and threatening issues facing direct marketers today. There are two fundamental prongs in the privacy debate. The first is the "leave me alone" syndrome, in which some feel that their personal privacy is being invaded when they are contacted by direct marketers, be it by telephone, mail, Internet advertising, or any other methods used by direct marketers to reach targeted audiences. The second, and in many ways far more complex, is the "how did they get my name?" or "what do they know about me?" syndrome. The two syndromes often overlap, and one almost always feeds the other in public debate.

Clear examples of the "leave me alone" syndrome are the multitude of state "do-not-call" lists that have been created or are currently under consideration in many state legislatures. Eight states have enacted some form of statewide "do not call" telephone lists, and we expect at least twenty-seven states to take up similar legislation this year. Many of them will pass in some form or another. The DMA lobbies actively on this issue in every state where the legislation is under consideration. Our position is generally that the lists are redundant and unnecessary in light of federal law and industry self-regulation.

Another example of the "leave me alone" attitude is the provision in the recently enacted sweepstakes legislation that requires organizations to maintain an in-house suppress file for those who do not want to receive sweepstakes promotions.

Examples of privacy legislation motivated by an equal mix of both syndromes are the Financial Services Modernization Act (H.R. 10) and a provision added to the annual transportations appropriations bill that requires states to use a notice and "opt-in" system before releasing motor vehicle and drivers license lists to direct marketers. An attempt will be made this year to revert to the notice and opt-out provisions of the original Drivers Privacy Protection Act, but it will be an uphill battle.

The privacy provisions of H.R. 10 were hotly debated in both the House and the Senate, a precursor of even more intense debates to come. Many members wanted to require notice and opt-in before customer information could be shared with third parties. In the end, the legislation that was approved by the President called for notice and opt-out for personally identifiable information. The main exception is a ban on the sharing with third party direct marketers of account numbers and similar information. It does not appear that this provision would affect the use of encrypted numbers, however.

There is continued cause for concern on this issue. Legislation has been introduced that would change the H.R. 10 privacy provisions to notice and opt-in (Richard Shelby, R-AL, has sponsored S. 1903, and Edward Markey, D-MA, has sponsored H.R. 3320). Medical information is also of great concern to many privacy advocates, and we expect legislation on the subject to be considered during the latter half of the 106th Congress. Senator Patrick Leahy (D-VT) has already introduced legislation on the general subject matter (Senator Leahy's bill is S. 573; other similar bills include H.R. 1057, introduced by Representative Markey (D-MA); H.R. 2878, introduced by Representative McDermott (D-WA); and H. R. 2404, introduced by Representative Murtha, D-PA).

The explosion of electronic commerce has been the major catalyst for the new focus on privacy concerns. The hugely enhanced capability of marketers to collect, collate, and store data about individuals has fueled the debate at many levels. While the Internet is the major concern, it is inevitable that any privacy legislation or regulation will affect all aspects of direct marketing regardless of whether or not it is Internet-related.

Last year, Congress passed the Children's Online Privacy Protection Act (COPPA), which requires parental consent before personally identifiable information could be collected on the Internet from children age 13 and under. This year, new legislation has been introduced by Senator Chris Dodd and Representative George Miller that would prevent companies and organizations that have commercial relationships with schools from collecting and using information from school children without parental permission (H.R. 2915). Other Internet related legislation this year includes moves to either regulate or ban unsolicited commercial email solicitations (SPAM) (some of the bills introduced in 1999 include H.R. 1686, introduced by Representative Goodlatte, R-VA, and S. 759, introduced by Senator Murkowski, R-AK).

One of the key influences in the development of privacy policy in the United States is the privacy directive promulgated by the European Union. The directive greatly restricts access to and use of personal information, generally based on the principles of notice and opt-in. More to the point, the directive would ban the transfer of such information to any country outside Europe of that country did not have laws as restrictive as Europe's. The United States currently maintains that our system of laws and self-regulation meet the requirements of the privacy directive, a position The DMA strongly supports. Nevertheless, we expect proposals to be made in the United States for legislation that would mirror Europe's.

Finally, there is significant privacy activity in the states. In California there are two privacy proposals that may be placed on the November ballot, and the state legislature is considering very broad privacy legislation. Extensive privacy measures have also been proposed in Massachusetts and Minnesota, and we can expect similar legislation in other states.

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