Privacy Matters: Co-op Databases and Consumer Privacy

One of the important parts of my job, leading the Direct Marketing Association’s ethics and consumer affairs activities, is hearing reactions to the practices of individual companies — and the direct marketing community in general — directly from consumers. These real world anecdotes allow us at the DMA to identify emerging concerns and issues that we can help you address and solve.

Lately we’ve noticed a new trend that most catalogers need to address: how consumers exercise their privacy choices in a world of co-op databases.

The usual scenario: Someone calls a company and asks to be removed from its mailing list, asking, “Where did you get my information from in the first place?” The DMA’s Guidelines for Ethical Business Practice requires members to disclose this source to consumers when asked.

A growing complaint is that customers are being told there are “multiple,” “combined” or “pool” sources, and that it isn’t possible to identify a single source for their information. Or the customer service reps say they don’t know the source, because many catalog companies share mailing lists and there is no way to track back to the original source.

I suspect that one of the things marketers struggle with is explaining cooperative databases to a confused and often untrusting public.

Clear-cut Benefits

The benefits of co-ops are obvious: They’re a great source of new and profitable consumer audiences, and can help ensure the accuracy of consumer data, since the input from many sources tends to build consistency. They offer new businesses the benefit of the selling experience of those already established in the marketplace.

But no matter where you get your information, you have a responsibility to respond to consumer questions in a way that is helpful, accurate and fair.

The DMA requires its members to disclose the source of personally identifiable information so that when consumers ask that age-old question — “How did you get my name?” — catalogers and other direct marketers answer in a way that’s honest and helps consumers exercise their choices, including the choice not to receive further mail from that source.

As industry leaders, we have to make sure that industry guidelines are implemented within the co-op database environment. Once consumers understand that the source is a co-op database, how do you as a marketer make certain their choices are honored, whether that be just to know the source, to opt-out of future mailings or to stop the sharing of their information? Here are some easy steps to follow:

Train your reps. Your customer service representatives should know what to do to make consumers’ requests effective, whether they ask:

• to be taken off your mailing list;

• to be given the source of their information;

• to not have their information shared; or

• to reduce mail in general, through registration with the DMA’s Mail Preference Service.

When your reps tell consumers that their information came from a co-op source, it’s best to name the co-op and then offer to contact it on consumers’ behalf.

Check your privacy policy. If you’re a member of a co-op, make sure your publicly available privacy policy indicates that you share data with third-party marketers. The exact language you use is crucial. If you routinely share the names of your customers with a co-op, a privacy policy statement such as, “We may at times make your contact information available to a very few select companies we think you might like to hear from” may not be an accurate statement.

Take responsibility for opt-outs. We often hear complaints that when consumers ask to be taken off a mailing list, they’re told that the company purchases its lists from outside sources and can’t do anything about it. The DMA requires members to maintain in-house suppression files, and there should be systems in place to ensure that you don’t continue sending your catalogs to prospects who have asked not to receive them.

Provide options. As consumers’ opt-out wishes broaden, the ability for any marketer to contact those consumers lessens. Many consumers will be satisfied with knowing the name of the co-op or source; others don’t want to hear from a particular cataloger again. Still others will want their names removed from the database and not rented to other catalogers. And a few will want to contact the co-op directly. Listen to what your customers want. Show you understand by offering options and responding to their specific request.

Use MPS properly. Many marketers simply tell customers to sign up for the DMA’s Mail Preference Service (MPS), rather than deal with an opt-out request. MPS is a useful tool that can help consumers substantially reduce the amount of mail they receive. But it won’t resolve all issues for consumers or marketers. Using MPS as a “one-stop shop” for all opt-out requests is counterproductive. After all, you certainly wouldn’t want your competitors telling consumers to place their names on MPS to make it impossible for you to contact them.

Know Your Co-op

When you work with co-op databases, their actions and positions seriously can affect your brand and reputation. So when evaluating co-ops, ask these questions:

1. Is the co-op privacy policy consistent with your own policy?

2. Can you give consumers the co-op name as the source for their information, and does the co-op have staff trained to handle requests from consumers?

3. If you ask the co-op to remove a consumer’s name from its database, does it have the ability to make certain it’s not then resubmitted back into the database by another member?

4. Does the co-op act selectively on consumer requests to be removed from the co-op database or does it refer customers to MPS to be removed from all databases?

5. How frequently is the co-op database updated to incorporate opt-out requests, MPS subscribers, deceased individuals and those who’ve changed addresses?

6. How does the co-op secure its data? How long is data retained, and how is it encrypted and otherwise protected physically and technologically?

Transparency is the best policy. And above all, it’s important to be open and honest with consumers about how you manage their personal information. Your own reputation and the long-term success or failure of the industry depends on building consumer trust and honoring consumer choices. Are you and your co-op up to the challenge?

Pat Kachura is senior vice president for ethics & consumer affairs at The Direct Marketing Association. You can reach her at (202) 861-2410 or pkachura@the-dma.org.