California list business headed for extinction?

Folio: The Magazine for Magazine Management, Feb, 1990 by Melissa Della Posta

California list business headed for extinction?

SACRAMENTO, CALIF. - A privacy bill pending in the California Senate could essentially wipe that state off the map for prospecting publishers and other direct marketers. In its present form, the Personal Information Integrity Act would require list vendors to notify consumers within seven days each time personal information about them is collected or transmitted, and allow them to correct any errors.

Personal information would include data from mailing lists and list enhancements (for example, demographic information), says William Julian, a chief consultant to Assemblywoman Gwen Moore, who sponsored the bill.

"California will be dead to direct marketers if this statute becomes law," contends Leah Durall, manager of state government affairs for the Direct Marketing Association. Not only would it severely restrict business within California, she says, but it would also set a powerful precedent that other states might follow.

"If all of us are faced with the impossibility of prospecting in California, the market gets smaller and smaller. Eventually, you won't sell there anymore," says Bruce Wright, senior vice president of advertising for Illinois-based Foster & Gallagher, which produces the Spring Hill Nurseries catalog.

Marketers say costs of complying with the proposed law would be prohibitive. Wright estimates that mailing costs for notifying consumers - via first class to meet the seven-day deadline - would run about $300 per thousand names, whereas the average list is rented for $100 per thousand. "The economics don't work," he says.

For that reason, many list businesses would fold, according to a survey of list company executives that was conducted by FOLIO:'s sister publication Catalog Age.

"It's logistically and financially impossible," says Rich Mercado, vice president of Direct Media, a list of management firm based in Greenwich, Connecticut.

"Chances are that most direct mail houses would go out of business," agrees Morris Klein, president and chief executive officer for California-based Direct Mail Marketing Services. He also questions the enforceability of such a law.

Legislative consultant Julian is quick to point out that the legislature is careful not to damage business practices. "The potential cost that would be imposed directly on information vendors and indirectly on marketers of goods and services is a legitimate concern."

The California bill was introduced last February and passed unopposed by the State Assembly in August. It is now pending in the Senate. The legislature reconvenes early this month and could vote on the bill at any time.

According to Julian, the initial objective of the bill was to articulate a right to privacy and address problems posed by new technologies. The bill centers on the idea that consumers have the right to know and inspect information disseminated about them, he says.

Unforeseen problems with the bill, however, prompted legislators to launch an expansive dialogue on the nature of personal information, the specific harm the bill is trying to prevent and appropriate solutions, Julian says. "The issues are complex enough that I don't expect the discussion to be concluded until after the first of the year."