~BtoB Magazine – Christopher Hosford – August 20, 2012

The clamor over companies tracking users’ online activity reached a crescendo last week with the Direct Marketing Association blasting a congressional investigation of companies that collect and sell marketing databases and sales contact lists.

In seeking details into these companies’ operations, Congress “appears to question legitimate commercial data practices,” said DMA Acting President-CEO Linda Woolley, in an Aug. 13 letter to the Bipartisan Congressional Privacy Caucus.

The effect could be to stifle business and job creation, Woolley said.

Woolley’s letter was in response to an investigation opened on July 25 by Reps. Edward J. Markey (D-Mass.) and Joe Barton (R-Texas), caucus co-chairmen, along with six other lawmakers. The privacy caucus targeted nine companies that deal with personal data in various ways, requesting such information as the sources of the data they collect; racial, ethnic or religious information collected; methods of data collection, such as social media or mobile usage; and consumer data access and opt-out methods.

The caucus said the information it sought would help determine whether legislators should enact a law regulating behavioral ads, which allow marketers to serve more personalized messages to users.

In criticizing the investigation, Woolley said that marketing data practices “are essential to America’s job creation, economic growth and global leadership, particularly with respect to the companies you have queried that collect and use data about consumers with whom they have a direct relationship.

“Quite simply, in the digital age, data-driven marketing has become the fuel on which America’s free-market engine runs,” she said.

The companies targeted by the caucus are diverse. Acxiom Corp., Epsilon and Harte-Hanks are direct marketing database companies. Equifax Inc., Experian and Fair Isaac Corp. are primarily involved in credit reporting, although Experian’s Marketing Services unit offers contact data management and customer acquisition services. Intelius Inc. sells background reports, Meredith Corp. sells magazine subscription lists to marketers and Merkle Inc. is a marketing agency.

The companies under investigation have struck a conciliatory tone.

“The topics addressed … are very similar to those that Experian has testified publicly about before Congress and a number of [Federal Trade Commission] events,” said Gerry Tschopp, Experian VP-public relations, in a statement released to StraightLine Direct. “We view this as another good opportunity to educate policymakers about the benefits of the appropriate use of consumer data.”

Also at the request of StraightLine, Acxiom said in a statement, “We have long worked in the legislative and regulatory arena and with consumer groups to further inform interested parties. … We are committed to increasing awareness in general [and] … look forward to being an active participant in this important discussion.”

Acxiom said it recently updated its website to answer common questions about its use of data. “At the site, people can also enter their own questions and we’ll answer those too,” according to the company’s statement.

Epsilon said it intends to cooperate with the lawmakers’ inquiry and is “happy to educate Congress about Epsilon’s data practices.”

The privacy caucus had given the nine targeted companies a deadline of Aug. 15 to respond to its lengthy questionnaire. As of today, Aug. 20, none had done so, according to Rep. Markey’s office.

“Generally companies are very responsive to congressional inquiries such as this, and we anticipate these companies will be the same,” Giselle Barry, a spokeswoman for Rep. Markey, told StraightLine.

The FTC has seemingly conflicting positions on regulating marketing data collection and use. While Chairman Jon Leibowitz has publicly said he supports industry self-regulation, the FTC’s final report on behavioral targeting, issued in the spring, urged legislation that would provide individuals access to what’s contained in marketing databases.

The report specifically charged “data brokers”—a coinage picked up and used by the congressional caucus in launching its investigation—as having “fallen short” in protecting sales contact information.

The FTC already has taken action against one Internet data broker. In June, it fined social media profiler Spokeo Inc. $800,000 for selling consumer data to companies to be used for employee screening.

It was the FTC’s first enforcement action over such an activity.