The Direct Marketing Association welcomes the opportunity to present a statement on H.R. 4213, H.R. 4122 and H.R. 3740, all seeking to amend the Fair Credit Reporting Act ("FCRA"). H.R. 4122 and H.R. 3740 seek to prohibit the practice of prescreening by credit reporting agencies. These same two bills also seek to prohibit credit reporting agencies from using data collected by them for target or direct marketing purposes. One of the bills, H.R. 4213, allows the continued release of credit reporting agency data for direct marketing purposes provided that the consumer receives advance notification of the intended use and is given the opportunity to have his or her name eliminated from target marketing lists and prescreening activities. The DMA strongly opposes any legislation that will prohibit outright both prescreening and legitimate marketing. applications of credit data. We do, however, support the practice of consumer notice and providing the consumer with an opportunity to limit disclosure, as contained in H.R. 4213. The specific notification requirements of H.R. 4213, however, go too far in detailing how such notice should be made and how individuals should be able to limit their inclusion on lists. The actual notice requirement of this bill will not effectively inform the public of the fact that information about them is being used for purposes of prescreening or target marketing. Target marketing and prescreening are well established and generally accepted commercial activities. inherently unfair to the consumer and indeed provide the consumer many opportunities to obtain credit and purchase goods or services. Legitimate consumer concerns, we believe, can and have been addressed without prohibiting these activities. Indeed, the recent "Equifax Report on Consumers in the Information Age" conducted by Louis Harris & Associates, found that eighty eight per cent of the total public surveyed had no objection to direct marketers' use of credit reporting agency data for marketing purposes as long as consumers were afforded an opportunity to have their names excluded from the marketing list. This statistic is particularly remarkable given the fact that in response to other questions, a majority of those surveyed thought that it was a bad thing for businesses marketing goods and services directly to consumers to buy from mailing listmaking companies information about consumer characteristics. Clearly the Equifax report indicates that an "opt-out" program is sufficient to make the mailing list activities acceptable to the public. Our industry also believes that marketers have even a broader interest in protecting individually identifiable data. It is a matter of trust. manner in which our industry's use of data is perceived by consumers is the cornerstone upon which the continued vitality of our industry depends. The We believe that the programs undertaken by the DMA have been successful and have proven that through education, general publicity and notice the interests of the public can be protected. More needs to be done and the DMA is working with its members and consumer groups to increase the effectiveness of its program. Our purpose in this statement is to describe the activities of the DMA and its members in the context of privacy protection. We fully support the interest of this Subcommittee in the examination of current privacy practices of credit reporting agencies and hope that we can continue to be of assistance to this Subcommittee. We believe that some historical content is helpful. "That a person engaged in interstate request of that individual, except The PPSC explicitly recommended against any mandatory legislation in favor of self regulatory activity. The Commission also concluded that the receipt of mail in itself was not the issue and that there should be no interference with that process. The Commission also recognized that a consumer did have a recognizable stake in how information was used and disseminated. The Commission recommended that entities inform consumers of their practices and give them an opportunity to "opt out", or have their name removed from a list, before it is transferred to a third party. We have included some examples of such notices as an addendum to this statement. The Commission acknowledged that industry actions should be reviewed over time to assure that they have kept pace with technological change. As we will describe, DMA has recently established a high-level task force on privacy that has re-examined and revised DMA's policies and guidelines on privacy. DMA's Privacy Protection Activities The concept of consumer protection is not new to the direct marketing industry and is broader than the issues of privacy. Indeed, one can argue that consumer protection concepts have played an important role in the growth that the industry enjoys today. The industry's first attempts at codifying guidelines came in the mid 60's with the Guidelines for Ethical Business These guidelines, or "codes" as they were called at Practice. the time, contained twelve suggested practices for direct marketers to conduct business in an ethical manner. Since that time, the guidelines have evolved dramatically. Today, the Guidelines for Ethical Business Practice, as well as Guidelines covering every aspect of a direct mail piece, from the development of a list, to the fulfillment of an offer have been developed. It became apparent in the early 70's that one set of guidelines was not sufficient to meet the needs of the ever-expanding and changing industry. Eventually, the Guidelines For Ethical Business Practice were expanded to include Guidelines for Personal Information Protection, Guidelines for Telephone Marketing, Guidelines for the Acceptance of Print Advertising, Guidelines for Mailing List Practices, and the Guidelines For Broadcast Advertising. These guidelines were developed to quantify the industry's commitment to conduct its business in an ethical manner. They are also meant as living documents to be utilized as part of a company's business philosophy. List offers that do not violate, or appear to violate, the consumer's interest in privacy, envelope copy that is intriguing as opposed to deceptive, are just a few of the examples of how the concepts behind industry standards have been incorporated into the operating procedures of successful direct marketing companies. Enforcement of Guidelines The Committee on Ethical Business Practice was established by the Direct Marketing Association in 1960 to investigate and examine mailings and offerings made throughout |