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Direct marketing in shadow of privacy concerns, legislation

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Marketers and industry experts at the Donnelley Group's Fifth Annual Information Privacy Forum last month in Aspen, Colo., addressed the spate of high-profile security breaches and identity theft incidents in recent months. Several speakers voiced concern that federal legislators would over-react to recent events and enact legislation-beyond the 2-year-old National Do Not Call Registry and CAN-SPAM Act-that could hobble b-to-b direct marketers in the future.

Jerry Cerasale, senior VP-government affairs at the Direct Marketing Association, said at least six congressional committees were now looking into database marketing and data security. He predicted Congress would enact laws for how customers are notified about data breaches. "Legislation may not happen this session. But for sure in 2006, they'll set a national standard," he said.

Cerasale's advice? "Know your customer when you rent or exchange databases and, if you're renting from others, know where it came from and how it was compiled," he said.

"It's a fertile ground for legislation," agreed Mike Rauscher, exec VP at Trilegiant Corp., a large direct mailer. He noted that 60% of American consumers have signed up for Do Not Call, 33% have pop-up blockers and 40% have said "Yes" to an end to unsolicited e-mail.

The impact on the industry has already included a significant drop in the number of outbound calls to prospects, as well as a consolidation of call centers, both within companies and among service providers, Rauscher said. "A major challenge to marketers is how to get the message out while complying with federal and state regulations," he added.

A potentially bigger problem may be how these incidents are affecting behavior. Noting that at least 50 million consumers have had their data compromised this year, Michael Turner, president and senior scholar at the Information Privacy Institute, said, "I don't think the sky is falling yet." But he went on to say the incidents have had a "mammoth effect on consumer behavior," with 80% of consumers in a recent poll saying they are reluctant to trust e-mail.

Campbell Tucker, director of Wachovia Bank's privacy office, said the bank limits the data it gives to vendors. "If they don't need it, don't give it to them," he said.

But Pam Dixon, executive director and founder of the nonprofit, nonpartisan organization World Privacy Forum, said the "temperature in the room had cooled" thanks to CAN-SPAM and the National Do Not Call Registry, and that her group was not seeing complaints against brand companies. Cerasale agreed: Current legislation has "helped give a little good will across the board," he said, creating awareness on the part of companies that they need to listen to consumers.

Another speaker who said the rules have had a positive impact was Jennifer Archie, a partner with Latham & Watkins, which has worked with AOL against spammers. "You can use CAN-SPAM to drive spammers off your brand," she said, adding that there has been a 74% reduction of spam to AOL and a drastic reduction of AOL complaints.

In addition to the privacy theme, the four-day Donnelley conference played host to celebrity keynote speakers. On one day, former Secretary of State Colin Powell spoke in the morning, business guru and author Tom Peters spoke in the afternoon and former President Bill Clinton, accompanied by his wife, Sen. Hillary Rodham Clinton (D-N.Y.), provided the dinner keynote.

After dinner the former president participated in a panel discussion on outsourcing and its impact on the U.S. While opinions differed, the panelists, who included Stan Gibson, editor of eWeek, and Esther Dyson, editor at large at CNET Networks, tended to agree that the outsourcing of U.S. jobs to such places as China and India was an unstoppable phenomenon and warned against the temptation to engage in trade protectionism. Clinton, who said outsourcing can be good for a company "but not always," criticized the Bush administration's tax cuts, which he said had resulted in record levels of U.S. debt that was being financed by some of the very nations benefiting from outsourced U.S. jobs. M

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