Public Policy Issues in Direct Marketing

Direct marketing is a method of generating sales through direct contact with the consumer. Examples include telemarketing, television infomercials and mail order. Direct marketing techniques have stretched the way that companies interact with consumers, and concern exists that their methods of data collection may breach public policy. Overstepping these policies, whether written or unwritten, may have a negative impact on the image of the company itself, thereby greatly impacting its sales.

An issue of great concern among the public pertaining to direct marketing concerns privacy. Telemarketers and mail order salesmen, for example, must obtain their list of potential customers from somewhere. While walking door-to-door and looking phone numbers up in a city phone book may be technically feasible ways of locating customer information, a more practical way to reach larger amounts of customers is to compile databases where individuals' private information is stored. Some companies will even keep, trade and sell this information as it's collected when individuals unknowingly give it away, such as on credit card applications. The legality of this practice is questioned by many, but such companies often protect themselves by including fine print that permits them to sell the information. This leads to privacy concerns as well as concern about identity theft.

According to the Direct Marketing Association's Guidelines for Ethical Business Practice, the issue of honesty about a company and its products is also of major concern to consumers. Direct marketers have an advantage over retail stores in that they don't need to keep an inventory of product on hand. Items are marketed to consumers, then orders are placed and filled. Since consumers aren't able to physically touch and inspect item quality, the opportunity for deception exists. Some companies may portray an item on an infomercial as being available in bright colors, for example. When the product arrives, however, it's dull and matte in tone. Did the consumer misjudge the colors on the television screen, or was it false advertising by the company?

Direct marketing companies often use databases of personal information to find clients that can sometimes be traded or purchased. If a particular list is sold to many groups, there are individuals in the database who may be contacted repeatedly by numerous salespeople. Over time, these calls, mailings or visits can infringe on people's lives and even turn into harassment.

Direct marketing companies will often use gimmicks to interest potential customers, such as the promise of winning great prizes or money in sweepstakes. By offering of these kinds of contests, direct marketers are able to convince potential customers to provide personal contact information on ballots, legally obtaining the data they need to contact them in the future. Public concern stems from the fact that these sweepstakes may not actually have prizes at all or may be unfairly weighted in favor of a company employee.