Understanding the Industry’s Environmental, Ethical and Legal Issues Chapter 11 Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Please Note: Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Opening Vignette Snow and Associates Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Ethics versus Morals Ethics are the moral principles of conduct governing the behavior of an individual or a group Morals are often described in terms of GOOD and BAD Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Environmental Issues 5 Objectives of DMA’s Environmental Resolution: Offering target and choice to mail recipients Questioning paper suppliers where the paper comes from Reviewing direct mail and direct marketing pieces, testing and downsizing when possible Encouraging suppliers to submit alternate solutions for environmentally preferable packaging Purchasing office papers, packaging and packaging materials made from recycled materials with post- consumer content Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Environmental Issues DMA “Recycle Please” public education campaign Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

The DMA Green 15: Benchmarking Environmental Progress Business Practices (Highlights from Figure 11-3) Paper Procurement & Use 1. Encourage paper suppliers to increase wood purchases from recognized forest certification programs. 2. Require paper suppliers to commit to implementing sustainable forestry practices 3. Ask paper suppliers where your paper comes from before buying it 4. Require paper suppliers to document that they do not produce or sell paper from illegally harvested or stolen wood. 5. Evaluate the paper you use for marketing pieces, product packaging and internal consumption to identify opportunities for increased environmental attributes. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

The DMA Green 15 (continued) List Hygiene & Data Management 6. Comply with DMA Guidelines for list management 7. Maintain lean mailing lists by using USPS or commercial equivalent files 8. Apply predictive models and/or Recency- Frequency-Monetary (RFM) segmentation where appropriate. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

The DMA Green 15 (continued) Mail Design & Production 9. Review your direct mail and printed marketing pieces, and test downsized pieces when and where appropriate. 10. Test and use production methods that reduce print order overruns, waste allowances and in-process waste. Packaging 11. Encourage packaging suppliers to submit alternate solutions for environmentally preferable packaging, in addition to quoting prices on approved or existing specifications. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

The DMA Green 15 (concluded) Recycling & Pollution Reduction 12. Purchase office papers, packing and packaging materials made from recycled materials with post- consumer content where appropriate. 13. Integrate use of electronic communications ( , Web and intranets) for external and internal communications. 14. Ensure that all environmental labeling is clear, honest and complete 15. Participate in DMA’s Recycle Please campaign and/or in another recycling campaign Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

DMA Guidelines for Ethical Business Practices Visit for updated versions of the guidelines. The terms of the offerCollection, use and maintenance of marketing data Advance consentOnline marketing Marketing to childrenTelephone marketing Special offers and claimsFundraising SweepstakesLaws, codes and regulations Fulfillment Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

DMA Ethics and Consumer Affairs This office assists marketers in maintaining consumer and community relationships that are based on fair and ethical principles. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Services Within the Ethics and Consumer Affairs Department Mail Preference Service (MPS) Telephone Preference Service (TPS) Preference Service (EPS) Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Basic Consumer Rights 1. The Right to Safety 2. The Right to Be Informed 3. The Right to Selection 4. The Right to Confidentiality 5. The Right to Privacy Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Legislative Issues Intellectual Property Security Privacy Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Privacy Legislation Since the 19 th century, laws about consumer rights to privacy have been constantly evolving with time and with technology. In recent years privacy has become a major issue for everyone. The process of DM has attained new success since the explosion of credit cards to the advent of personal computers and cyberspace. Direct marketers with customer knowledge have an edge over the ones that do not, but there is an ethical question, how much do we need to know? Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Privacy Protection Study Commission Privacy Act of mainly concerned with databases and mailing lists Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Privacy Today - Anti-Spam Laws CAN-SPAM Act of applies to commercial s and its main provisions are that it: Ban false or misleading header information Prohibits deceptive subject lines Requires that your give recipients an opt- out method Requires that commercial be identified as an advertisement and include the sender’s physical postal address Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Types of Information General Descriptive Information Ownership Information Product Purchase Information Sensitive/Confidential Information Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Consumer Privacy Segments Privacy Unconcerned Privacy Fundamentalists Privacy Pragmatists Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

DMA Commitment to Consumer Choice An expansion of The DMA “Privacy Promise” in The DMA Commitment to Consumer Choice provides public assurance that all members of the DMA will be following certain specific “practices” to protect consumer privacy. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Four Components of the Commitment to Consumer Choice 1. Provide customers, donors and prospects with notice of their ability to “opt-out” of information exchanges. 2. Honor customer opt out request not to have their contact information transferred to others for marketing purposes. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

The DMA Commitment to Consumer Choice (con’t.) 3. Accept & maintain consumer requests to be on an in-house suppress file to stop receiving solicitations from your company. 4. Use the DMA Preference Services. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

DMA Online Privacy Principles Additional privacy principles and guidelines have been established for direct marketers operating on-line sites and state: Marketers must make their information practices available to consumers in a prominent place on the website Marketers must furnish consumers with an opportunity to opt out of the disclosure of such information Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Platform for Privacy Preferences Initiative (P3P) Currently under development this initiative would enable web browsers to read a web site’s privacy policy automatically and compare it with the user’s privacy preferences Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Regulatory Authorities of Direct Marketing Federal Trade Commission Federal Communication Commission United States Postal Service State and Local Regulation Private Organizations Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Federal Communication Commission Established by the Communication Act of 1934 Charged with regulating interstate and international communications by radio, television, wire, satellite and cable Enforces the Telephone Consumer Protection Act (TCPA) & its new DNC legislation Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Federal Trade Commission The FTC is charged with regulating content of promotional messages used in interstate commerce FTC Act and the Wheeler-Lea Amendment (public health-foods, drugs, cosmetics and therapeutic devices) FTC Act prohibits unfair or deceptive advertising There are many rules and guidelines that all merchandisers must abide by Mail, telephone, fax, and computer order merchandisers Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

United States Postal Service USPS has rules and regulations that impact the promotional activities of direct marketers Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

State and Local Regulation Specific organizations that use direct marketing strategies are closely regulated by state regulation Insurance companies, lending associations, banks and pharmaceutical companies Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Private Organizations Better Business Bureaus are sponsored by private businesses and organizations to prevent promotional abuses through common sense regulation The Direct Marketing Association(DMA) have provided ethical guidelines for use by their members and others desiring to adhere to them Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Future: Self Regulation Or Legislation Self-regulation is the preferred method by direct marketers - “CPO’s” Eight step self regulation program for direct marketers to follow (see text) If direct marketers do not follow the policies and procedures, legislation will limit their access to public information Permission Marketing…the future? Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Conclusion Upholding ethical guidelines in carrying out direct marketing activities is crucial to the present and future success of the direct marketing industry Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter Case The TCPA Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall